Rawson Finances Pty Ltd v Commissioner of Taxation

Federal Court of Australia (Full Court)|2016-07-12|Before: Bromwich JJ

Leave to appeal be granted.
The appeal be treated as instituted and heard instanter.
The appeal be allowed.
The orders made by the primary judge on 22 April 2016 be set aside, and in lieu thereof it be ordered that the interlocutory application be dismissed with costs.
The respondent pay the appellant's costs of the application for leave to appeal and the appeal.
If either party seeks a variation of the orders relating to costs at first instance, it may give written notice to the Court and the other party within two business days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 By interlocutory application in a proceeding between the respondent (the Commissioner) and the applicant (Rawson), the Commissioner sought an order that a letter of request be issued to the judicial authorities of Israel to take or cause to be taken the evidence of the chairwoman of the board of the Mercantile Discount Bank (MDB) in Israel. The order was sought pursuant to s 7 of the Foreign Evidence Act 1994 (Cth) (the Foreign Evidence Act). 2 The primary judge ordered that a letter of request be issued. A draft of the letter of request was annexed to the orders. It included a request that, in aid of and ancillary to the examination, a subpoena duces tecum, summons or equivalent order be issued or made requiring the chairwoman, as the proper officer of MDB, to produce documents falling within certain categories of documents set out in a schedule. The schedule set out four categories of documents relating to the banking relationship between MDB and Rawson over many years. The draft letter of request included a general question about the nature of all the arrangements between MDB and Rawson relating to the transmission of funds in the period 1997 to 2009. There was no evidence to suggest that the chairwoman had any personal knowledge of those arrangements. The only evidence about the proposed witness was her name and position as chairwoman. The draft letter of request also included a series of questions about each document produced in response to the subpoena duces tecum, summons or equivalent order. 3 Rawson has sought leave to appeal from the orders of the primary judge. It was ordered that the leave to appeal application, and any appeal, be heard together. Rawson contends, in summary, that the request was in substance a request for discovery and production of documents from a third party and thus outside the scope of s 7 of the Foreign Evidence Act; that there was no evidence as to whether the chairwoman would be able to give evidence material to any issue to be tried in the proceeding (this being a matter to be taken into account under s 7); and that there was no evidence as to whether the chairwoman was willing or able to come to Australia to give evidence in the proceeding (another matter to be taken into account under the section). 4 For the reasons that follow, leave to appeal should be granted and the appeal allowed. In summary, the primary judge erred in concluding that the documents sought to be produced were in aid of, or ancillary to, the request to examine the chairwoman about the nature of the arrangements between MDB and Rawson. The primary judge also erred in concluding that the chairwoman would be able to give evidence material to the issues to be tried in the proceeding.

The proceeding 5 The proceeding in which the interlocutory application was issued involves a claim by the Commissioner to set aside the decision of the Full Federal Court in Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307 (the First Full Federal Court decision) on the ground that it was obtained by fraud. Further, or in the alternative, the Commissioner seeks to set aside, also on the ground of fraud, both the First Full Federal Court decision and the decision of the Administrative Appeals Tribunal (the AAT) in Areffco v Commissioner of Taxation (2011) 84 ATR 924 (the AAT decision). 6 The AAT decision and the First Full Federal Court decision arose in the following way. By assessments for the years of income ended 30 June 1997 and 1998, the Commissioner included in Rawson's assessable income amounts it received in Australia from MDB (AUD 3 million in the 1997 year and AUD 1.75 million in the 1998 year), which receipts Rawson contended were loans made to it by MDB. By assessments or amended assessments for the years of income ended 30 June 1997 to 2008, the Commissioner disallowed amounts claimed by Rawson as allowable deductions, which amounts Rawson contended represented interest incurred by it on the loans from MDB. Rawson objected to the assessments and amended assessments. Those objections were disallowed. Rawson commenced review proceedings in the AAT. In the course of the AAT proceedings, Rawson adduced evidence from several witnesses. As recorded in [11] of the primary judge's reasons in relation to the interlocutory application, the Commissioner described the effect of that evidence as follows: a. Rawson's directors had a family history of setting up special purpose vehicles to take loans from Israeli Banks; b. Israeli Banks operated differently to Australian banks as Israeli Banks were willing to lend to foreign entities on the basis only of personal guarantees and relationships; c. the directors of Rawson and family members of the directors had direct involvement with Israeli Banks through various entities including BCI Finances Pty Limited (BCI), Advance Finances Pty Limited (Advance) and Civic Finances Pty Limited (Civic); d. each of BCI, Advance and Civic, received significant loans from Israeli Banks that were not supported by cash deposits and which were not back to back loans; and e. similarly, [by inference] the Rawson loans were not supported by any deposit or back to back arrangement and MDB was willing to make the loan on the strength of a personal guarantee from a former director of Rawson. (Emphasis in original.) 7 The evidence referred to above was accepted by the AAT and, in the AAT decision, the AAT set aside the decisions under review. 8 The Commissioner appealed to this Court on questions of law pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). The appeal was allowed: Federal Commissioner of Taxation v Rawson Finances Pty Ltd (2012) 89 ATR 357. 9 Rawson then appealed to the Full Federal Court. In the First Full Federal Court decision, the Court allowed the appeal and ordered that the orders of the primary judge be set aside and in lieu thereof it be ordered that the application by way of appeal from the AAT be dismissed. 10 As recorded in [13] of the primary judge's reasons, the Commissioner contends in the proceeding that he subsequently obtained documents which demonstrated that the loans made to BCI, Advance and Civic were secured with cash deposits and were known as back-to-back loans, and that this was known to witnesses who gave contrary evidence on behalf of Rawson in the AAT. The Commissioner contends that, on the basis of these documents, it is to be inferred that the Rawson loans were supported by deposits and Rawson's evidence that they were secured merely by personal guarantees was false. On the basis of these matters, the Commissioner alleges that the AAT decision and the First Full Federal Court decision were obtained by fraud.

The relevant provisions 11 It is convenient at this point to set out the key relevant provisions. Sections 7 and 8 of the Foreign Evidence Act provided as follows: 7 Orders for taking evidence abroad (1) In any proceeding before a superior court, the court may, if it appears in the interests of justice to do so, on the application of a party to the proceeding, make an order, relating to a person outside Australia: (a) for examination of the person on oath or affirmation at any place outside Australia before a judge of the court, an officer of the court or such other person as the court may appoint; or (b) for issue of a commission for examination of the person on oath or affirmation at any place outside Australia; or (c) for issue of a letter of request to the judicial authorities of a foreign country to take the evidence of the person or cause it to be taken. (2) In deciding whether it is in the interests of justice to make such an order, the matters to which the court is to have regard include the following: (a) whether the person is willing or able to come to Australia to give evidence in the proceeding; (b) whether the person will be able to give evidence material to any issue to be tried in the proceeding; (c) whether, having regard to the interests of the parties to the proceeding, justice will be better served by granting or refusing the order. 8 Directions and requests relating to orders (1) If a court makes an order of the kind referred to in paragraph 7(1)(a) or (b), the court may, at the time of making the order or at a later time, give such directions as it thinks just relating to the procedure to be followed in relation to the examination, including directions about: (a) the time, place and manner of the examination; and (b) any other matter that the court thinks relevant. (2) If a court makes an order of the kind referred to in paragraph 7(1)(c), the court may include in the order a request about any matter relating to taking that evidence, including any of the following matters: (a) examination, cross-examination or re-examination of the person, whether the person's evidence is given orally, on affidavit or otherwise; (b) attendance of the legal representative of each party to the proceeding in question and participation of those persons in the examination in appropriate circumstances; (c) any matter prescribed by the regulations.

The interlocutory application 12 By the interlocutory application, the Commissioner sought orders pursuant to s 7(1)(c) of the Foreign Evidence Act that a letter of request be issued to the judicial authorities of Israel to take or cause to be taken the evidence of Ms Lilach Asher-Topilsky, chairwoman of the board of MDB, and to have Ms Asher-Topilsky produce nominated documents "in aid of and ancillary to the examination" (Order 1). To facilitate compliance with that request, a mandatory injunction was also sought requiring Rawson to provide to the Court a document signed by or on behalf of Rawson consenting to MDB producing nominated documents and waiving unconditionally any rights of secrecy, privacy or confidentiality in respect of the documents sought in aid of Ms Asher-Topilsky's examination (Order 2). In the alternative, the Commissioner sought an order that Rawson provide to the Commissioner (or his duly appointed agent) any signature, document, permission or authority (including a power of attorney or other authority) required by MDB and any assistance reasonably required by the Commissioner or MDB in order for MDB to release to the Commissioner or his agent, for production to the Court, any documents that fell within nominated categories of documents (Order 3). 13 The primary judge did not consider it appropriate for an order to be made in terms of Order 2 or 3. There is no application for leave to appeal against that part of the primary judge's decision; therefore, these aspects of the interlocutory application and the decision below can be put to one side. 14 The primary judge considered that it was appropriate for an order to be made in terms of Order 1 sought by the Commissioner. The form of the draft letter of request (including attachments) annexed to the primary judge's orders reflects some amendments proposed by the Commissioner in his reply written submissions before the primary judge. 15 We now outline the draft letter of request as sought by the Commissioner at the hearing below and as annexed to the primary judge's orders. The draft letter contained the heading, "Request for international judicial assistance pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters". The draft letter then set out details of the sender, the central authority of the requested state, and the person to whom the executed request was to be returned. Following this, the draft letter provided information and detail referable to particular articles of that Convention. In relation to the nature and purpose of the proceedings and summary of the facts, the draft letter referred to Attachment "A"; in relation to the evidence to be obtained or other judicial act to be performed, the draft letter referred to Attachment "B"; and in relation to the questions to be put to the person to be examined or a statement of the subject-matter about which the person is to be examined, the draft letter referred to Attachment "C". 16 Attachment "A" to the draft letter set out a description of the proceeding. It is unnecessary for present purposes to describe this part of the draft letter. 17 Attachment "B" dealt with the evidence to be obtained or other judicial act to be performed and was in the following terms: 1. The evidence to be obtained is the evidence of Lilach Asher-Topilsky, Chairwoman of the Board of Mercantile Discount Bank. 2. The general nature and subject matter of the examination of Lilach Asher-Topilsky and the nature of the questions to be put during the examination are detailed in attachment "C" to the letter of request. 3. It is also requested that, in aid of and ancillary to the examination, a subpoena decus [sic] tecum, summons or equivalent order which requires Lilach Asher-Topilsky, as the proper officer of Mercantile Discount Bank to produce documents that fall within the categories of documents described in the schedule. Schedule to Attachment B of Annexure A 1. All documents recording or evidencing the application for, approval of, granting or making of, and terms of (including terms relating to any security and guarantees), any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1996 to 30 December 2011, including but not limited to any agreement for general business terms; agreement for opening a current account and its management; agreement for credit; agreement for collateral deposit safekeeping; personal guarantee; pledge and set off agreement; notice of pledge or negative pledge undertaking; pledge agreement or deed of pledge or letter of irrevocable instructions in relation to a deed of pledge, bank guarantee, standby letter of credit, application for or conditions of any free foreign currency account, corporate resolutions for the account of Rawson Finances Pty Ltd, any agreement as to the guarantor's signatures for the account holders, any documents that contain references to a back-to-back loan, any documents that contain references to the differential between the interest rate of the deposit and the interest rate of the loan, any correspondence received from or sent to Rawson Finances Pty Ltd or its agents or representatives including its solicitors, any documents or bank statements that refer to non resident deposit accounts. 2. For the period 1 January 1997 to 31 December 2013 all documents recording: 2.1 any payments or transfers of funds by Mercantile Discount Bank to Rawson Finances Pty Ltd or any person or entity at the direction of Rawson Finances Pty Ltd; 2.2 any payments or transfers of funds received by Mercantile Discount Bank from Rawson Finances Pty Ltd or from any person or entity at the direction of Rawson Finances Pty Ltd; 2.3 the balance standing to the credit or debit of any loan account, finance facility or deposit account held at Mercantile Discount Bank on behalf of, or in the name of, or for the benefit of Rawson Finances Pty Ltd. 3. All documents recording or evidencing any agreement, arrangement or understanding between Mercantile Discount Bank and Rawson Finances Pty Ltd, or any person or entity acting on behalf of, for the benefit of or in relation to Rawson Finances Pty Ltd, which is or was collateral to, or connected in any way with, any loan, finance facility or advance of money by MDB to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013. 4. All documents recording or evidencing any communication between Mercantile Discount Bank (or any of its officers, employees, representatives or agents) and Rawson Finances Pty Ltd (including agents, representatives, solicitors or any person acting for, in relation to or on behalf of Rawson Finances Pty Ltd) relating to or in connection with any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013. 18 Attachment "C" to the draft letter of request, which set out a statement of the subject-matter about which the person was to be examined, and the questions to be put to the person to be examined, was in the following terms: 1. The general subject-matter of the examination is the nature of the arrangements between Rawson Finances Pty Limited and Mercantile Discount Bank between 1997 and 2009 and the description, nature and provenance of the documents that have been filed by the applicant in the Federal Court proceedings as well as any documents located, identified and produced by or on behalf of Mercantile Discount Bank in response to a subpoena decus [sic] tecum, summons or equivalent order issued or made to Mercantile Discount Bank. 2. The general nature of the questions to be put to the examinee are detailed in the schedule below, though allowance is to be made for the judicial rules, procedures and practices of the requested State. It may be necessary to ask additional or varied questions depending on what, if any, documents are produced by Mercantile Discount Bank in answer to the subpoena, summons or equivalent order. Schedule to Attachment C of Annexure A 1. What is your full name and occupation and where do you work? 2. What are your duties and responsibilities in your work position? 3. What was the nature of all the arrangements between Mercantile Discount Bank and Rawson Finances Pty Limited in relation to the transmission of funds between Mercantile Discount Bank and Rawson Finances Pty Limited in the period 1997 to 2009? 4. In your position, are you aware that a subpoena decus [sic] tecum, summons or equivalent order has been issued or made to Mercantile Discount Bank … requiring it to produce documents that fall within specified categories of documents? 5. Do you have with you and are you able to produce the subpoena decus [sic] tecum, summons or order or a copy thereof? 6. Have searches been made by yourself, or to your knowledge other officers of Mercantile Discount Bank, to locate and identify documents that fall within the categories of documents detailed in the subpoena decus [sic] tecum, summons or order? 7. If yes, what searches have been made? 8. Have any documents been identified and located as a result of the searches? 9. If yes, do you produce, or are you aware that there has been produced by Mercantile Discount Bank, documents in answer to the subpoena decus [sic] tecum, summons or order? 10. If yes, the following questions should be put in relation to each document: 10.1 what is the document? 10.2 is it dated and if so, what is its date? 10.3 is the author or maker of the document, if any, known or ascertainable and if so, who was the author or maker? 10.4 does the document, or did the document at any time, form part of the records belonging to or kept by Mercantile Discount Bank? 10.5 does the document contain representations or statements made or recorded in the course of or for the purpose of the business of Mercantile Discount Bank? 10.6 if yes, were the statements or representations made by a person who might reasonably be supposed to have had personal knowledge of the facts in the statements or representations, or on the basis of information directly or indirectly supplied by such a person? 11. During or as a result of the searches, were any documents identified as having once existed and been in the custody or control of Mercantile Discount Bank, but which either do not now exist, or are no longer in the custody and control of Mercantile Discount Bank and as a result cannot be produced? 12. If yes, in respect of each such document: 12.1 what is or was the document? 12.2 why is it not possible to produce the document? 12.3 what information, if any, is known about the contents of the document? 19 In support of the interlocutory application, the Commissioner relied on an affidavit of Thomas Charles Arnold, the solicitor with the day-to-day carriage of the matter for the Commissioner, affirmed on 12 February 2016, and certain documents exhibited to that affidavit and an earlier affidavit filed in the proceeding. Mr Arnold was not cross-examined and no evidence was filed in opposition to the application. 20 Mr Arnold's affidavit commenced with a section headed, "Overview and Summary" which identified various companies, including Rawson, BCI, Advance and Civic, associated with members of the Binetter family. The affidavit referred to and briefly described taxation proceedings in the AAT and this Court involving Rawson, BCI, Advance and Civic and stated: (c) At issue in each of these proceedings was whether the applicant should be assessed on certain sums received from various Israeli banks in respect of transactions which the applicants described as loan transactions and whether the applicant was entitled to deductions in respect of payments in relation to those transactions. In summary, the Commissioner's case in each of the matters was that the asserted loans were not genuine loans, and if properly characterised as loans, that was not a complete explanation of the relevant arrangements and that the relevant applicant in each proceeding had not discharged its onus of establishing that the relevant assessments were excessive … (d) In summary, the cases put forward by the various Binetter entities in the various proceedings was that the moneys received by the entities from the Israeli banks represented genuine loans and were not supported by cash deposits and were not merely a part of some other broader arrangement such as a back to back arrangement … (e) A number of contentions were advanced by the various Binetter entities to explain the absence of documents and evidence, inter alia: a fire in a warehouse; the death of Erwin Binetter; the mental incapacity of Emil Binetter; and the general intransigence of Israeli banks in providing documents; to explain the paucity of contemporaneous source material that would usually be expected, given the magnitude and term of the various purported loans … 21 The next section of the affidavit was headed, "Likelihood that Rawson would be given access to the relevant MDB documents". This referred to expert evidence filed by the Commissioner in the AAT proceeding involving Rawson to the effect that it was entitled to obtain documentation from MDB. The affidavit noted that Rawson had not made any written request for its records in the course of the AAT proceeding. 22 The affidavit then dealt with the topic, "Likelihood that the documents exist", referring to expert evidence filed by the Commissioner in the AAT proceeding to the effect that loan applications, details of the security for the loan and all correspondence with the borrower were required to be kept by the bank for at least seven years after the final payment of the loan; and that, in many cases, such records were kept for much longer. The affidavit stated that the AAT found that Rawson repaid the loan on 11 December 2009. The affidavit described some of the banking documents relied on by Rawson in the AAT proceeding, the similarity between those documents and banking documents involving Advance, and referred to documents obtained by the liquidators for Advance which were said to indicate that the loan from MDB to Advance was supported by a cash deposit. 23 After referring to a letter of request application in a proceeding concerning BCI, the affidavit contained a section headed, "Difficulties with Obtaining documents using the Court's Ordinary Compulsive Processes". This described statutory notices to produce documents that had been issued by the Commissioner to Mr Andrew Binetter and Rawson in 2007, and summonses to produce documents that had been issued by the Commissioner in the AAT proceeding in 2010. These compulsory processes had not led to the production of documents recording or evidencing any deposit made or moneys held with any financial institution or bank outside Australia, to be used as security or otherwise related to the loans from Israeli banks described in Rawson's affidavits, during the period 1 July 1995 to 30 June 2008. 24 The affidavit did not suggest that Ms Asher-Topilsky had any involvement in the arrangements between MDB and Rawson during the relevant period or subsequently. It did not indicate whether she had worked at MDB during the relevant period or how long she had held the position of chairwoman. And it did not address whether she would be willing and able to give evidence in the proceeding.

The decision of the primary judge 25 After describing the background to the interlocutory application, the primary judge (at [14]) recorded a submission by the Commissioner that the evidence he sought to obtain by the interlocutory application was likely "to afford direct evidence of the falsity of Rawson's case put in the AAT with respect to Rawson loans" (there being only inferential evidence of the fraud at present). (Emphasis in original.) 26 The primary judge set out the relevant provisions and stated that the phrase in s 7(1)(c) of the Foreign Evidence Act, "to take the evidence of the person" (or cause it to be taken) is to be interpreted in accordance with Australian law and not the law of the country to which the letter of request is addressed: Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 14 FCR 461 (Elna) at 464 per Gummow J. The primary judge then stated (at [19]): Secondly, as Rawson submits, it is clear from its terms that s 7 does not extend to issuing a request for the production of documents: Elna at 465 (Gummow J). So much is apparent from the fact that the power is expressed as a power to issue a letter of request "to take the evidence of the person" (emphasis added). Thus in Elna, Gummow J refused an application for the issue of a letter of request for evidence to be obtained by an order of the English High Court of Justice for the production of documents. Nor, as Rawson also submits, does s 7 give the Court jurisdiction to order third party discovery of documents or to issue the foreign equivalent of a subpoena duces tecum: Novotny v Todd [2002] WASCA 79 … at [53] (McLure J) (by analogy). (An order duces tecum is an order to a person to attend court and produce documents). However, it was not in dispute that s 7 does authorise the issue of a request for orders for the production of documents ancillary to or in aid of the oral testimony of a witness. 27 The primary judge also stated that the fact that evidence has been obtained through the process for which s 7 provides does not mean that it will ultimately be admitted into evidence at the trial and referred to s 9 of the Foreign Evidence Act. 28 After setting out the draft letter of request as sought by the Commissioner, the primary judge referred to Rawson's contentions that the proposed letter of request was in substance a request for the discovery and production of documents by a third party, not the taking of evidence of a person, and that the evidence sought from the witness was not "material to any issue to be tried in the proceeding" (s 7(2)(b)). The primary judge rejected these submissions, accepting the Commissioner's submission that "the purpose of the letter of request is to have the nature of the transactions that occurred between MDB and Rawson explained and the letter of request is not, therefore, properly characterised as in substance a request for discovery and production" and also concluding that "the evidence sought from Ms Asher-Topilsky is material to the main issues in the proceedings" (at [25]). 29 The primary judge expressed three principal reasons for those conclusions. First, the general subject-matter of examination included the description, nature and provenance of documents already in the Commissioner's possession, as indicated in paragraph 1 of Attachment "C". The primary judge said in this regard, "Plainly insofar as the request relates to documents already in the Commissioner's possession, it cannot be characterised as a request for production or third party discovery" (at [26]). 30 Secondly, the primary judge accepted that the documents sought to be produced were "properly sought as ancillary to, and in aid of, the request to examine Ms Asher-Topilsky about the nature of the transactions between MDB and Rawson" (at [27]). The primary judge accepted a submission by the Commissioner that, as Ms Asher-Topilsky may not herself have direct knowledge of some or all of the events concerning the dealings between MDB and Rawson over the whole period from 1997, "she may need to explain the transactions through the documents filed in the proceedings and the documents to be produced, both in terms of their content and in the context of MDB's processes" (at [27]). The primary judge also accepted the Commissioner's submission that the addition of question 3 to the Schedule to Attachment "C" (this being one of the changes set out in the Commissioner's reply written submissions) "did not do more than identify what plainly underlies the proposed questions in the Schedule … in any event" (at [27]). 31 Thirdly, the primary judge said that it was not a valid objection to the issue of the letter of request that "several of the questions sought to be asked appear largely to be directed to ascertaining the provenance, or providing a foundation for the admissibility of, the documents to be produced or already within the Commissioner's possession where, as here, those documents are material to the issues" (at [28]). The primary judge considered the construction of s 110(2)(b) of the Evidence Act 1906 (WA) adopted by McLure J (as her Honour then was) in Novotny v Todd [2002] WASCA 79 (Novotny) at [49] (rejecting a distinction between testamentary evidence concerning an issue in the proceeding and testamentary evidence directed solely at rendering admissible documentary evidence that is material to an issue in the proceeding) to be equally applicable to s 7 of the Foreign Evidence Act (at [28]). After referring to BCI Finances Pty Limited v Commissioner of Taxation (2012) 89 ATR 861 as an illustration of a case where the Court issued a letter of request for the taking of evidence as to the provenance of documents and for production of documents ancillary to that request, the primary judge said (at [31]): It follows, therefore, that the fact that the proposed questions are largely directed to the provenance of the documents and matters relevant to their admissibility and weight does not establish that the request is really a 'Trojan horse' for discovery and production, contrary to Rawson's submissions. I do not accept the submission by Rawson put in the abstract that the court can determine provenance simply by looking at the documents and that Ms Asher-Topilsky's "evidence will add absolutely nothing in the real world to their admissibility." This is particularly so in a case where the cause of action is fraud which must be strictly proved. (Emphasis in original.) 32 The primary judge distinguished Novotny on the basis that there were significant differences between the request sought to be issued in the present case, on the one hand, and that rejected in Novotny, on the other. The primary judge said (at [35]): The present case is different in a number of significant respects. (1) The proposed witness is identified by name, as opposed to being identified simply as the proper officer. (2) The questions are directed to ascertaining the nature of the arrangements between Rawson and MDB, and between Advance and MDB, and in particular whether they were fraudulently represented in the AAT, which are the primary issues raised in these proceedings, and to facilitating the admission of documentary evidence relevant to that issue. (3) The classes of documents identified in the Schedule to Attachment B of Annexure A are precisely described and are all documents likely to bear directly upon the question of the nature of the arrangements between Rawson and MDB in the relevant period in relation to the transmission of funds between MDB and Rawson including, for example, documents recording the making of loans or advances of money and the terms of such transactions, and all documents recording or evidencing any agreement, arrangement or understanding which was collateral to any such loan or advance. (4) As Chairperson of the MDB, it can fairly be inferred that Ms Asher-Topilsky understands the Bank's procedures and practices, and has the authority to make inquiries within the Bank in relation to the provenance of the documents in question and as to the other matters on which questions are sought to be asked, to the extent to which they are not matters within her own knowledge in any event. 33 For those reasons, the primary judge concluded that the interlocutory application was not properly characterised as a request for the production, or discovery, of documents (at [36]). 34 As to whether Ms Asher-Topilsky was willing or able to come to Australia to give evidence in the proceeding (s 7(2)(a)), the primary judge said that Rawson's evidence in the AAT proceeding suggested that no officer of MDB would be willing to come to Australia to give evidence in the proceeding; noted that in submissions in the AAT, Rawson had relied on the fact that MDB was out of Rawson's control and its officers were not compellable to attend to give evidence in the AAT; and said that no evidence was led by Rawson to suggest that Ms Asher-Topilsky was willing to come to Australia to give evidence in the proceeding. The primary judge was satisfied that it could be inferred that there was no real prospect that Ms Asher-Topilsky would be willing or able to come to Australia to give evidence in the proceeding (at [42]-[46]). 35 As to whether Ms Asher-Topilsky would be able to give evidence material to any issue to be tried in the proceeding (s 7(2)(b)), the primary judge said that it followed from the reasons already given as to why the application was not considered to be in substance a request for discovery (and from the reasons already given for rejecting an argument put by Rawson which is not pursued on the application for leave) that it was likely that Ms Asher-Topilsky would be able to give evidence material to issues to be tried in the proceeding. 36 As to whether justice would be better served by granting or refusing the order (s 7(2)(c)), the primary judge said (at [48]): I accept the Commissioner's submission that the interests of justice are best served by an order in terms of proposed Order 1 to issue a letter of request for the examination of Ms Asher-Topilsky and for the production of the nominated documents in aid of and ancillary to the examination. In particular, given the evidence already obtained by the Commissioner in relation to the nature of the transactions between BCI, Advance and Civic, I consider that there is a sufficient basis in the evidence on which to infer that the evidence sought from Ms Asher-Topilsky as to the nature of the transactions between Rawson and MDB is likely to materially assist in resolving an issue in the proceedings in a direct way. Nor in the event that their other objections were not accepted did Rawson contend otherwise.

The application for leave to appeal and draft notice of appeal 37 The judgment of the primary judge being an interlocutory judgment, leave to appeal is required: Federal Court of Australia Act 1976 (Cth), s 24(1A). Rawson seeks leave to appeal on the following seven grounds: 1. The trial judge erred in ordering that a letter of request be issued to the judicial authorities of Israel to take evidence of Ms Lilach Asher-Topilsky ("the Witness"). 2. The trial judge erred in concluding that the Witness was unwilling or unable to come to Australia to give evidence. 3. The trial judge ought to have held that there was no evidence that the Witness was unwilling or unable to come to Australia to give evidence. 4. The trial judge erred in concluding that the Witness will be able to give evidence material to any issue to be tried in the proceeding. 5. [The] trial judge ought to have held that there was no evidence that the Witness will be able to give evidence material to any issue to be tried in the proceeding. 6. The trial judge erred in concluding the documents sought to be produced from the Mercantile Discount Bank were ancillary to the examination of the Witness. 7. The trial judge ought to have held that the application was in substance an application for discovery and production of documents. 38 These grounds are replicated in Rawson's draft notice of appeal.

Leave to appeal 39 The considerations to be taken into account by the Court upon an application for leave to appeal are, first, whether in all the circumstances the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court and, second, whether substantial injustice would result if leave were refused supposing the decision to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 per Sheppard, Burchett and Heerey JJ. In that case, the Full Court emphasised that while these considerations provide general guidance which the Court should normally accept, there would continue to be cases raising special considerations "and the court should not regard its hands as tied in any case beyond this" (at 399). The Full Court also referred to the important distinction between the common interlocutory decision on a point of practice, in respect of which a "tight rein" should be kept on appeals, and an interlocutory decision determining a substantive right, where leave will more readily be granted (at 400). 40 In the present case, substantial arguments have been put forward by Rawson to question the correctness of the interlocutory decision in respect of which leave is sought. If leave were refused, assuming the decision to be wrong, this would have an impact not only upon Rawson but also upon the judicial authorities of another country and the third party witness to be examined. In these circumstances, we consider this to be an appropriate case for a grant of leave to appeal.

Foreign Evidence Act 41 The Foreign Evidence Act is described in its long title as "An Act about certain evidentiary matters involving overseas jurisdictions". Part 2, with which this appeal is concerned, relates to the examination of witnesses abroad. By way of context, Pt 3 is concerned with the use of foreign material in criminal and related civil proceedings, Pt 3A with the use of foreign material and foreign government material in terrorism-related proceedings, and Pt 4 with the use of foreign material and records of foreign business authorities in certain civil proceedings. Part 5 deals with the authentication of foreign public documents and Pt 6 with taking evidence for proceedings in foreign courts. 42 Part 2 of the Foreign Evidence Act comprises ss 7 to 19, arranged in four Divisions. Division 1, which relates to proceedings in superior courts (as defined) and comprises ss 7 to 9, is the Division of central relevance to this appeal. Sections 7 and 8 are set out in [11] above. Section 9 provided as follows: 9 Use of evidence taken in an examination (1) Subject to subsection (2), the court may, on such terms (if any) as it thinks fit, permit a party to the proceeding to tender as evidence in the proceeding: (a) a person's evidence taken in an examination held as a result of an order under subsection 7(1); or (b) a record of that evidence. (2) Evidence of a person so tendered is not admissible if: (a) it appears to the court's satisfaction at the hearing of the proceeding that the person is in Australia and is able to attend the hearing; or (b) the evidence would not have been admissible had it been adduced at the hearing. 43 Section 4 of the Act provided: 4 References to evidence taken in an examination A reference in this Act to evidence taken in an examination includes a reference to: (a) a document produced at the examination; and (b) answers made to any written interrogatories presented at the examination, whether the answers are made in writing or are made orally and put in writing. 44 The word "examination" was defined in s 3 as follows: examination includes any proceeding that is for the taking of evidence of a person conducted by the judicial authorities of a foreign country in relation to a letter of request issued as a result of an order made by a superior court under Part 2. 45 The expression "superior court" was defined in s 3 of the Act as meaning (inter alia) the High Court of Australia; this Court or the Family Court of Australia; or the Supreme Court of a State, when exercising federal jurisdiction. 46 The relevant rules are rules 29.11-29.23 of the Federal Court Rules 2011 (Cth). 47 The legislative history of the relevant provisions is as follows. In 1985, amendments were made to the Evidence Act 1905 (Cth) (by the Evidence Amendment Act 1985 (Cth)) to introduce a new Pt IIIB, dealing with the examination of witnesses abroad. That Part comprised ss 7T to 7Z. It was substantially re-enacted in Part 2 of the Foreign Evidence Act when that Act was enacted in 1994. The central provision in Part IIIB of the Evidence Act 1905 was s 7V. The substance of that section was reflected in ss 7, 8 and 9 of the Foreign Evidence Act as enacted (the terms of which have not been amended since). Also, s 7V(9) of the former Act was reflected in s 4 of the Foreign Evidence Act. The definition of "examination", which appeared in s 7T of the earlier Act, was reflected in the definition of "examination" in s 3 of the Foreign Evidence Act. 48 By the time of the enactment of the Foreign Evidence Act, Australia had acceded to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. That accession occurred in 1992. 49 The provisions of Pt IIIB of the Evidence Act 1905, in particular s 7V, were considered by Gummow J in Elna. In that case, a letter of request was sought, addressed to the English High Court of Justice, for evidence to be obtained by an order for the production by a named company of documents set out in a schedule. The applicant submitted that the order it sought was of the description in s 7V(1)(c) (which is reflected in s 7(1)(c) of the current Act), namely the making, in relation to the named company, a person outside Australia, of an order for the issue of a letter of request to the English High Court of Justice to take, or cause to be taken, the evidence of that person. Gummow J held that the procedures which the applicant sought to invoke were not for the taking, or causing to be taken, of the evidence of a person. His Honour said (at 464-465): The question is whether the procedures in England which the applicant seeks to have brought into operation are within the meaning of the Australian Act procedures for the taking or causing to be taken the evidence of ICL Computers Ltd. The meaning of the expression "to take or to cause to be taken, the evidence of [a] person" in an Australian statute would ordinarily be interpreted in accordance with the law in force in this country (that is statute law and common law) rather than in accordance with the law of that country to the courts of which the letter of request was directed. Nothing in this case turns on that distinction, and reference was made by both sides to English legislation and court procedures, and common law institutions and concepts were treated as applicable without any relevant national differences. The respondent submits that an order for production of documents to a court is not, in the ordinary usage of a common law system, an order for the taking or causing to be taken the evidence of the party ordered so to produce the documents, whether an individual or a corporation appearing by its proper officer. Thus, it was said, a provision such as O 38, r 13 of the English Supreme Court of Judicature Rules (UK) which speaks of an order to produce documents, has the effect of a subpoena duces tecum and does not involve the court to whom the documents are produced in the taking of evidence by reason only of that production. … This rule and its predecessors have a fairly long history and they have indeed been treated as having the effect of a subpoena: Re Smith; Williams v Frere [1891] 1 Ch 323; Supreme Court Practice (1985) vol 1, par 38/13/1. See also O 33, r 13 of the Federal Court Rules; O 36, r 12 of the Supreme Court Rules 1970 (NSW); O 37, r 7 of the Rules of the Supreme Court 1958 (Vic); Lucas Industries Ltd v Hewitt (1978) 45 FLR 174; and Australian Consolidated Press Ltd v Bond (1982) 61 FLR 91. The production of documents to a court in compliance with a subpoena or an order in the nature of a subpoena is not the taking of evidence or the causing of the taking of evidence of the person producing the documents: National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372 at 377-385; Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927-928. See also the reasoning of Devlin J (as he then was) in Radio Corp of America v Rauland Corp [1956] 1 QB 618 at 647-648. The applicant submits that nevertheless, on the true construction of Pt IIIB, the procedure I have described is one for the taking of evidence. He referred to the Attorney-General's second-reading speech; but whilst the Attorney certainly dealt with the obtaining of oral and documentary evidence he did not do so in any way which, in my view, supports the applicant's submission. The applicant further referred to s 7V(9) as throwing light upon s 7V(1)(c). But the reference there to production of documents at an examination is plainly to production at a proceeding for the taking of evidence: see the definition of "examination" in s 7T, and subss (5) and (6) of s 7V. Some reliance was also placed by the applicant upon s 2(2)(b) of the Evidence (Proceedings in Other Jurisdictions) Act 1975 (UK). This empowers English courts to respond to requests issued by, inter alia, foreign courts, by making orders, inter alia, "for the production of documents". That power in the English courts cannot of course remedy any limitation upon the powers of an Australian superior court under Pt IIIB of the Evidence Act 1905. Further, it appears that s 2(2)(b) of the 1975 United Kingdom Act was introduced to remedy what was perceived to be a deficiency in earlier legislation. This had been held, in the absence of other clear words, to authorise orders for the production of documents as ancillary to the oral testimony of a witness, but not to authorise orders in effect for discovery of documents against a person not a party to the action: Radio Corp of America v Rauland Corp [1956] 1 QB 618 at 647-648; Panthalu v Ramnord Research Laboratories Ltd [1966] 2 QB 173 at 189; Seyfang v G D Searle & Co [1973] 1 QB 148 at 151-152; cf Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475 at 483-484. Accordingly, I hold that the application before me is not for an order satisfying the description in s 7V(1)(c) of the Evidence Act 1905. (Emphasis added.) 50 Justice Gummow also considered whether the inherent jurisdiction of the Court would support the making of an order as sought by the applicant and concluded (at 465-467) that it would not. 51 The decision in Elna was followed by Lindgren J in Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 18) (1995) 133 ALR 667. The principles quoted in [49] above were followed by Anderson and McLure JJ in Novotny at [4] and [43]-[44] in relation to comparable State legislation. In Westpac Banking Corporation v Halabi (unreported; Supreme Court of New South Wales; 22 December 1987), Rogers J expressed a "tentative view" that those principles were inapplicable to the comparable rules of the Supreme Court of New South Wales, but did not need to reach a concluded view. See also, Davies M, "Evidence, Documents and Preliminary Discovery in International Litigation" (1996) 26 University of Western Australia Law Review 286. Neither party to the present appeal suggested that Elna should not be followed. In our view, the principles set out in Elna are equally applicable to the expression, "take the evidence of the person or cause it to be taken" in s 7(1)(c) of the Foreign Evidence Act, there being no material difference between the provision discussed in Elna and the current provision. 52 We note that the reference to documents being ancillary to the oral evidence of a witness, in the passage from Elna set out above, was in the context of provisions of United Kingdom legislation concerned with the English courts' response to requests issued by foreign courts. The analogue in the Foreign Evidence Act is the provisions in Pt 6, which deal with the taking of evidence for proceedings in foreign courts. Be that as it may, we accept that the provisions of ss 7 and 8 of the Foreign Evidence Act do authorise an order to be made for the issue of a letter of request which includes a request that a subpoena duces tecum, summons or equivalent order be issued or made where the production of the documents sought is in aid of, or ancillary to, taking (or causing to be taken) the evidence of a person under s 7(1)(c). That such an order is capable of being made is supported by s 8(2) which provides that, if a court makes an order of the kind referred to in s 7(1)(c), the court may include in the order a request about "any matter relating to taking that evidence". Inferential support is also provided by s 4, which contemplates that a document may be produced at an examination. It was common ground on the appeal that such an order is authorised by the provisions. 53 It is clear from the text of s 7(2) that the three matters there set out are matters to which regard must be had in deciding whether it is in the interests of justice to make such an order. The text also makes clear that this is an inclusive rather than an exhaustive list.

Disposition of the appeal 54 The question to be determined is whether the primary judge erred in concluding that the draft letter of request was one for the taking of the evidence of a person within the meaning of s 7(1)(c) of the Foreign Evidence Act. 55 As noted in [28] above, in rejecting Rawson's contentions, the primary judge accepted the Commissioner's submission that "the purpose of the letter of request is to have the nature of the transactions that occurred between MDB and Rawson explained and the letter of request is not, therefore, properly characterised as in substance a request for discovery and production". In our view, it is preferable to approach the matter by reference to the terms of the draft letter of request, viewed in the context of the proceeding and the evidence filed in connection with the interlocutory application, rather than seeking to ascertain the applicant's purpose or object in seeking the order. 56 The first reason provided by the primary judge, referred to in [29] above, was that the general subject-matter of examination included the description, nature and provenance of documents already in the Commissioner's possession, as indicated in paragraph 1 of Attachment "C". It is true that paragraph 1 of Attachment "C" referred to documents that had been filed by the Commissioner in the proceeding. But these documents were not annexed to the draft letter of request, nor were they the subject of any specific questions in Attachment "C". The questions about documents in Attachment "C" were all directed to the documents to be produced in response to the subpoena duces tecum, summons or equivalent order (subpoena for production) requested in paragraph 3 of Attachment "B" and not to documents filed by the Commissioner in the proceeding. It may or may not be that question 3 in Attachment "C", which asked about the nature of all the arrangements between MDB and Rawson in relation to the transmission of funds during the relevant period, would encompass questions to be asked (for example, by a lawyer appearing on behalf of the Commissioner if the Israeli court adopted such a procedure) about documents already in the Commissioner's possession. However, even if it be assumed that it would, it is not apparent that the proposed witness would be able to give probative evidence about those documents and thus evidence material to an issue to be tried in the proceeding. As noted above, the affidavit in support of the interlocutory application did not provide any information about Ms Asher-Topilsky. There is no evidence to suggest that she had any involvement in the relevant arrangements between MDB and Rawson. Nor is there any evidence to suggest that she has familiarity with the relevant MDB procedures and practices and so would be able to give evidence on this basis about the documents already filed by the Commissioner in the proceeding. We would respectfully disagree with the primary judge's conclusion (see [32] above) that it can be inferred that, as chairwoman of MDB, Ms Asher-Topilsky understands MDB's procedures and practices. In the absence of evidence about the size of the bank or the particular circumstances, we would not infer that a person holding the position of chairperson of the board of a bank is, by reason of holding this position, familiar with the bank's procedures and practices. Further, the potential for Ms Asher-Topilsky, as chairwoman of the board, to make inquiries within MDB as to the provenance of documents and other matters does not overcome the difficulty. The question whether the witness would be able to give evidence material to any issue in the proceeding is to be approached by reference to evidence she herself would be able to give, rather than by reference to the evidence or knowledge of others. Thus, to the extent that the primary judge relied on the general subject-matter of the request including the description, nature and provenance of the documents already filed by the Commissioner in the proceeding, it is difficult to see how the evidence of Ms Asher-Topilsky about those documents would be material to any issue to be tried in the proceeding (a matter to which regard is to be had under s 7(2)). 57 The second reason given by the primary judge, as set out in [30] above, was that the documents sought to be produced were "properly sought as ancillary to, and in aid of, the request to examine Ms Asher-Topilsky about the nature of the transactions between MDB and Rawson". The draft letter of request included, in paragraph 3 of Attachment "B", a request that a subpoena for production be issued "in aid of and ancillary to" the examination. The documents sought under the subpoena for production were set out in four categories which related to the banking relationship between MDB and Rawson during the period 1997 to 2013. Of particular relevance, given the issues the Commissioner seeks to agitate in the proceeding, were category 1 which sought documents "that contain references to a back-to-back loan", and category 3 which sought documents recording or evidencing any agreement, arrangement or understanding "which is or was collateral to, or connected in any way with, any loan … by MDB to Rawson". Attachment "C" contained a series of questions about the subpoena for production and each document produced in response to the subpoena: see questions 4 to 12. In particular, question 10 comprised a series of questions to be asked in respect of each document produced. The difficulty is that, insofar as Attachment "C" contained questions about the documents to be produced, the questions were ancillary to the production of the documents, rather than the production being in aid of, or ancillary to, the questions to be asked about those documents (being the taking of the evidence of the person). Further, as discussed above in relation to documents already in the Commissioner's possession, it is not apparent that Ms Asher-Topilsky would be able to give probative evidence about the documents to be produced and thus evidence material to an issue to be tried in the proceeding. Again, there is no evidence to suggest that she had any involvement in the relevant arrangements between MDB and Rawson and no evidence to suggest that she has familiarity with the relevant MDB procedures and practices. Apart from confirming that the documents constitute part of the books and records of MDB, there is no evidence to suggest that Ms Asher-Topilsky would be able to give probative evidence about the documents. For these reasons, it is difficult to see how the evidence of Ms Asher-Topilsky about the documents to be produced in response to the subpoena for production would be material to any issue to be tried in the proceeding (s 7(2)(b)). 58 For these reasons, in our respectful opinion, the primary judge erred in the consideration of whether an order that the draft letter of request be issued was authorised by s 7(1)(c). However, we do not consider that any error is shown in the primary judge's view, referred to in [31] above, that the fact that proposed questions are directed to the provenance of documents and matters relevant to their admissibility does not preclude the possibility that the evidence will be material to an issue to be tried in a proceeding. Whether or not this is the case will depend on the issues that arise in the particular proceeding. Further, we do not consider that any error has been shown in the primary judge's conclusion, referred to in [34] above, that it could be inferred that there was no real prospect that Ms Asher-Topilsky would be willing to come to Australia to give evidence in the proceeding. In particular, we do not accept Rawson's submission that the primary judge in effect put the burden on Rawson to show that Ms Asher-Topilsky was not willing to come to Australia to give evidence. 59 In these circumstances, we will consider whether an order should be made for the issue of the draft letter of request. In our view, for the reasons set out below (which have largely been canvassed already), an order should not be made for the issue of the draft letter. 60 Insofar as the draft letter contains a request for a subpoena for production to be issued, that request is not in aid of, or ancillary to, the taking of the evidence of Ms Asher-Topilsky. There are two aspects to this. First, the specific questions about the documents to be produced, set out in Attachment "C", are ancillary to the production of the documents, rather than the subpoena for production being in aid of, or ancillary to, the questions. Second, it is not established that Ms Asher-Topilsky would be able to give probative evidence about the documents produced in response to the subpoena, therefore it is not shown that she would be able to give evidence material to an issue to be tried in the proceeding (s 7(2)(b)). 61 Insofar as Attachment "C" contained, in question 3, a general question about the nature of all the arrangements between MDB and Rawson in relation to the transmission of funds between MDB and Rawson in the period 1997 to 2009, it is not established that Ms Asher-Topilsky would be able to give probative evidence about this (whether by reference to documents already in the possession of the Commissioner or otherwise). The reasons why this is not established have been discussed above. During the hearing of the appeal, senior counsel for the Commissioner submitted that the principal issue was whether the documents before the AAT constituted a complete record of the transactions between MDB and Rawson. On the basis of the current evidence, there is insufficient basis to infer that Ms Asher-Topilsky would be able to give probative evidence about this. In these circumstances, it is not established Ms Asher-Topilsky would be able to give evidence material to an issue to be tried in the proceeding (s 7(2)(b)). 62 We would be prepared to infer, on the same basis as the primary judge, that Ms Asher-Topilsky is not willing to come to Australia to give evidence in the proceeding. This factor counts in favour of the making of an order. 63 The third matter to which regard is to be had under s 7(2) is whether, having regard to the interests of the parties to the proceeding, justice would be better served by granting or refusing the order. It follows from our conclusions regarding materiality that, in our view, the interests of justice do not favour the making of an order for the issue of the draft letter of request. 64 Taking these matters into account, an order should not be made for the issue of the draft letter of request. While s 7(2) does not set out an exhaustive list of matters to which regard is to be had, the matters that have been discussed above provide sufficient reason to conclude that an order should not be made. 65 It follows from the above reasons that, even if the request for the issue of the subpoena for production and the associated questions were removed from the draft letter of request, we would not consider it appropriate for an order to be made that the draft letter of request be issued.

Conclusion 66 For the reasons set out above, leave to appeal will be granted, the appeal will be treated as instituted and heard instanter, and the appeal allowed. The orders of the primary judge (which provided for the issue of the draft letter of request and that costs be reserved and that the interlocutory application be otherwise dismissed) should be set aside. There is no apparent reason why costs should not follow the event in relation to the application for leave to appeal and the appeal. There will, therefore, be an order that the Commissioner pay Rawson's costs of the application and the appeal. The primary judge ordered that the costs of the interlocutory application be reserved. In light of the outcome on appeal, it appears to be appropriate that the Commissioner pay Rawson's costs of the interlocutory application. However, as there were no submissions on costs below, if either party wishes to be heard in relation to those costs orders, it may give written notice to this effect within two business days. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson, Moshinsky and Bromwich.

Evidence Amendment Act 1985(Cth)

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