Re Sentry Corporation v Peat Marwick Mitchell and Co and Sentry Insurance A Mutual Company [1990] FCA 278; 24 FCR 463

Re Sentry Corporation v Peat Marwick Mitchell and Co and Sentry Insurance A Mutual Company [1990] FCA 278; 24 FCR 463 - FCA 1990 case summary — Zoe

[32]

1. On 28 March 1990, in Wisconsin SIAMCO served a "Request

for Production of Documents" on PMM seeking discovery of

documents produced by PMM to Sentry in the course of

discovery in the Federal Court proceedings (AB, 1/195).

2. On 5 April 1990, SIAMCO's American attorney informed the

Wisconsin Circuit Court that SIAMCO desired to take oral

depositions of PMM personnel in Australia regarding that

firm's contacts with Wisconsin (AB, 1/186).

3. On 13 April 1990, a motion was filed by PMM in the

Wisconsin Circuit Court for a "Protective Order" seeking

to limit discovery to the issues raised in PMM's motion

and to prohibit oral depositions (AB, 1/179).

4. On 27 April 1990, proceedings took place before Judge

Finn in the Wisconsin Circuit Court. PMM's motion for a

protective order was denied. An order was made

compelling discovery by requiring PMM to consent to the

release to SIAMCO of all documents discovered in

Australia to Sentry (AB, 1/214).

5. On 9 May 1990, SIAMCO's attorney wrote to the attorney

for PMM in America enclosing various motions which

sought, inter alia, to restrain PMM from pursuing before

the Federal Court the motion which PMM had earlier that

day filed in the Federal Court to stay Sentry's

cross-claim against PMM and to restrain the use of

documents (AB, 1/237).

6. On 10 May 1990, Judge Finn declined to make any order

restraining PMM from pursuing its motion dated 9 May

1990 before the Federal Court (AB, 1/265).

7. On 15 May 1990, the Court of Appeals of Wisconsin

granted leave to PMM to appeal from the orders made on

10 May 1990, and limited the scope of discovery to

jurisdictional issues (AB, 1/258, 262).

8. On 17 May 1990, SIAMCO stated its intention not to seek

orders restraining PMM from prosecuting the motion dated

9 May 1990 in the Federal Court of Australia (AB, 1/273).

9. On 22 May 1990, notices of the taking of depositions

issued (AB, 2/11-12, 15). The taking of these

depositions was to commence in Sydney on 4 June 1990 and

to continue to 8 June 1990.

10. On 22 May Judge Finn also ordered that during the days

of May 28 to 1 June 1990 PMM permit the attorneys for

SIAMCO to view and copy at PMM's Sydney office all

documents which it had produced to Sentry in connection

with the Australian proceedings "in discovery or

otherwise". The order for discovery in this court was a

general order (T/S78) which covered many thousands of

documents, in respect of audits over four years.

11. On 22 May 1990, Judge Finn ordered, amongst other

things, that depositions be taken in Sydney, limited to

issues of jurisdictional fact raised in PMM's motion to

dismiss SIAMCO's amended complaint (AB, 2/11-12, 45-48).

12. On 25 May 1990, the Wisconsin Court of Appeals denied

PMM's petition for leave to appeal from the order of

Judge Finn of 22 May 1990, and its motion for a stay of

that order, stating that "our decision does not deprive

PM-Australia of a remedy because it had the option of

seeking a Protective Order in Australia" (AB, 2/84-88).

13. On 28 May 1990, PMM agreed to give SIAMCO access to

documents in its possession relating to the proceeding

before the Federal Court, and permitted representatives

of SIAMCO to commence inspection of those documents (AB,

2/132).

14. A motion by PMM in the Wisconsin Circuit Court to

dismiss or stay SIAMCO's action there was set down for

hearing on 25 July 1990.

[60]

"What is clear from all those authorities is

that each case must depend upon its own

particular circumstances, that the Courts,

both in England and in Australia, have been

careful not to lay down any particular

restrictions to be applied in every case and

stress the need to keep in mind that a party

should not be deprived of a right to prosecute

an action in the Courts in Australia since to

do so, of necessity, causes an injustice to

that person seeking relief. But at the same

time the Court should not allow the use of the

two proceedings to cause an injustice to a defendant.

In the present case Peat Marwick Australia is

in the position of a defendant. The mere

existence of the two proceedings in Australia

and Wisconsin of itself is not oppressive,

vexatious or an abuse of the process of the

Court. More is required.

A similar position arises in cases where a

party is a party to the proceedings in the

Court in which the application is made as well

as a party in the foreign proceedings where an

injunction can have the same effect. Here, it

is to be remembered that Sentry and Siamco are

different legal persons.

An illustration of an injunction can be seen

by a reference to the decision of the Privy

Council in Societe Nationale Industrielle

Aerospatiale v Lee Kui Jak (1987), 1 AC 871

where there is a consideration of the same

general principles as are discussed in the

stay cases but in the context of an

injunction. But the opinion expressed there

makes it clear that each case must be

determined on the particular facts of each

case and it must be shown that in the

circumstances of any case, to allow the two

proceedings to continue would, in the

circumstances, be vexatious, oppressive or an

abuse of process. There is one passage in

that case which is very helpful in considering

the present case, at page 893, the following

passages appears:-

'Another important category of case in

which injunctions may be granted is where

the plaintiff has commenced proceedings

against the defendant in respect of the

same subject matter both in this country

and overseas, and the defendant has asked

the English court to compel the plaintiff

to elect in which country he shall alone

proceed. In such cases, there is

authority that the court will only

restrain the plaintiff from pursuing the

foreign proceedings if the pursuit of

such proceedings is regarded as vexatious

or oppresive; see McHenry v. Lewis

(1882) 22 Ch D 397 and Peruvian Guano

Co. v. Bockwoldt (1883) 23 Ch D 225.

Since in these cases the court has been

presented with a choice whether to

restrain the foreign proceedings or to

stay the English proceedings, we find in

them the germ of the idea that the same

test (i.e. whether the relevant

proceedings are vexatious or oppresive)

is applicable in both classes of case, an

idea which was to bear fruit in the

statement of principle by Scott L.J. in

St. Pierre v. South American Stores (Gath

and Chaves) Ltd. (1936) 1 KB 382, 398, in

relation to staying proceedings in this

country, a statement of principle now

overlaid by the adoption in such cases of

the Scottish principle of forum non

conveniens, which has been gratefully

incorporated into English law.'

I am informed from the bar table that the

principles expressed in the Oceanic Sunline

case have been considered further by the High

Court in a more recent decision in which argument

has been heard but judgment has been reserved.

I propose to apply the principles as to

whether, on the facts of this case, it is an

abuse of the process of the Court or vexatious

or oppressive to Peat Marwick Australia for

the claim against it being pursued in the

Wisconsin Circuit Court in the particular

circumstances of this case."

[64]

"In my opinion the proceedings by SIAMCO in the

United States do have the effect of causing a

very grave injustice to Peat Marwick Australia

in the proceedings in this case to the extent

that they do constitute an abuse of the

process of this Court of a kind sufficient to

justify this Court making an order of the type

sought. In coming to this opinion I rely upon

the fact that the proceedings in the United

States were commenced in October 1988 and it

was not until January 1990 that Peat Marwick

Australia was joined as a party. It is

realized that Peat Marwick Australia, in one

sense, is a moving party in what has happened

since then in that it has applied to have the

proceedings against it in the United States

stayed and in so doing has unleashed a series

of procedural steps which on their face do

interfere in my opinion with the proceedings

currently before this Court. This Court has

before it a series of causes of action which

are going to give rise to a very lengthy and

difficult hearing. It is said that the

hearing might take four or five months. The

matter has been set down for hearing and on

its face the amended complaint in the United

States proceedings is based upon damages

depending upon what happens in the Australian

proceedings. In addition to that the

interlocutory proceedings in the United

States, on their very face, make reference to

the proceedings in this Court and require the

production of the documents which have been

prepared for the purposes of making the

cross-claim in these proceedings, making those

documents available to SIAMCO in Australia

albeit under the guise of jurisdiction, but,

in my opinion, in reality going beyond that.

It is realized that the parties are different,

but SIAMCO is the controller of Sentry. There

is the one person, Mr Ducey, who is acting for

SIAMCO in the United States and apparently at

the same time for Sentry in Australia. The

proceedings in the United States have the

appearance, and I say no more than that, of

being a tactic to harass Peat Marwick

Australia in the conduct of its proceedings in

Australia. All the facts of this case support

the view, in my opinion, that the proceedings

in the Wisconsin Circuit Court are designed to

have a bearing upon or interfere with or have

a harassing effect on Peat Marwick Australia

in its conduct of the proceedings in this Court.

In those circumstances seeing that SIAMCO is

not a party to the proceedings in Australia

this Court cannot make any injunctive order

against SIAMCO, but it can make orders of the

kind sought in this case, namely, the order in

the form . . . set out earlier in these reasons.

I propose to make that order."

[113]

1. That PM-Australia's request that oral depositions

be prohibited until this Court decides its

motions to dismiss the amended complaint and to

stay this action, is once again denied.

2. That PM-Australia's request that depositions be

stayed until determination of its appeal is denied.

3. That the oral depositions noticed by SIAMCO dated

May 8, 1990, shall be conducted at the offices of

Phillips Fox, Solicitors and Attorneys, 20 Bond

Street, Level 17, Sydney, New South Wales, Australia.

4. PM-Australia shall cause the following

individuals to be produced at such offices, on

the dates and times set forth below, which dates

and times shall be the local dates and times in

Sydney, Australia, all for the purpose of giving

their oral depositions in this matter as provided

by Chapter 804, Wisconsin Statutes:

Name Date Time

George Henry Bennett Monday, June 4, 1990 9:00 am

James Stewart Cuming Tuesday, June 5, 1990 9:00 am

John H. Richardson Wednesday, June 6, 1990 9:00 am

Maryann Russett Thursday, June 7, 1990 9:00 am

(if she is currently an employee of PM-Australia)

G. Girvan Thursday, June 7, 1990 1.30 pm

G. Jaworski Thursday, June 7, 1990 3.30 pm

H.R. Greenway Friday, June 8, 1990 9.00 am

Peter Kingston Friday, June 8, 1990 10:30 am

R.A. Lamond Friday, June 8, 1990 1:30 pm

5. That such depositions shall be taken before

either John Schindhelm or Vicky L. Berna,

Milwaukee, Wisconsin, court reporters, who shall

record such testimony by stenographic means.

6. That John Schindhelm or Vicky L. Berna, and

either of them, is hereby authorized,

commissioned and directed by this Court, pursuant

to s. 804.03(2), Wis. Stats., to administer the oath

to each deponent at the time of his or her deposition.

7. That George Henry Bennett shall bring with him

and produce at the commencement of his

deposition, any and all documents (as defined by

Wisconsin Statutes s. 804.09(1)), notes,

correspondence or other writings referred to or

used by Mr. Bennett in making his affidavits dated

March 23, 1990, and April 18, 1990, on file herein.

8. That the scope of examination in the above oral

depositions shall be limited to issues of

jurisdictional fact raised by PM-Australia's

pending motion to dismiss plaintiff's amended

complaint; provided, however, that in the event

the Court of Appeals modifies its orders to

permit discovery with respect to the pending

motions of PM-Australia as to real party in

interest or to stay this proceeding, then such

subjects shall also be permitted within the scope

of the above oral depositions.

9. That during the days of May 28 to June 1, 1990,

between the hours of 9:00 a.m. and 5.00 p.m., PM-

Australia shall permit the attorneys for SIAMCO,

including specifically, C. Patout Ducey and/or

Richard C. Ninneman, to view and copy at the

offices of PM-Australia, Sidney, (sic) Australia

with arrangements to be made through Allen Allen

and Hemsley, the following:

All documents within the

possession, custody, or control

of PM-AUS which have been

produced by PM-AUS to The Sentry

Corporation ('Sentry') in

discovery, or otherwise, in

connection with the lawsuit in

the Federal Court of Australia,

General Division, Victoria

District Registry, styled

National Mutual Holdings PTY.

LTD., et al. v. The Sentry Corporation,

et al., No. VG 173 of 1987.

10. That plaintiff's order to show cause dated May

10, 1990, to preliminarily enjoin PM-Australia

and find PM-Australia in contempt is denied."

[149]

58. In considering whether to grant the injunction sought by PMM his Honour noted that the conduct sought to be restrained is conduct within Australia and conduct within the jurisdiction of this Court. At the instigation of SIAMCO persons are to come to Australia and engage in the conduct set out in the notices of depostion attached to his Honour's order of 23 May 1990. His Honour found that his Court has a statutory jurisdiction to punish for contempt (s. 31(1) of the Federal Court of Australia Act 1976 and s. 24 of the Judiciary Act 1904). He found that the power to restrain conduct which could constitute a contempt is an incidental and necessary power of this Court and referred in particular to Parsons v Martin [1984] FCA 408; (1985) 5 FCR 235 at 240-1. He found that an injunction may be granted to prevent conduct that would constitute contempt if committed. His Honour found that the conduct in which SIAMCO proposed to engage in Australia with respect to the depositions would constitute a contempt of this Court. He referred again to the circumstances in which PMM was joined as a defendant to the Wisconsin proceedings in January this year and to the fact that the cross-claim by Sentry against PMM in this Court has been stayed so that there are no proceedings presently pending between Sentry and PMM in this Court. His Honour held that the depositions sought could extend to questions relating to many of the issues arising in the proceeding pending in this Court and that the documents required to be produced under order no. 7 made by Judge Finn could extend to documents prepared for the purposes of litigation within the principal proceeding in this Court. His Honour noted that the type of contempt of court alleged in this case was an interference with the administration of justice of the type discussed by the High Court in Victoria v Australian Building Construction Employees and Builders Labourers Federation [1982] HCA 31; (1982) 152 CLR 25 and Pioneer Concrete Victoria Pty. Limited v Trade Practices Commission [1982] HCA 65; (1982) 152 CLR 460. His Honour held that taking of the depositions by SIAMCO would constitute a real risk of an interference with the administration of justice, namely, the principal proceeding pending in this Court. He noted that PMM and its employees are sought to be examined on oath in this country under threat, if the oath is refused to be given or questions are refused to be answered by those persons, of being in contempt of the Wisconsin Circuit Court. The questions are directed to the issue of whether the Wisconsin Circuit Court has jurisdiction over PMM, in a complaint against it which is based on the outcome of proceedings in this Court. Documents are to be produced in relation to affidavits in the Wisconsin Court, but in all probability are relevant and may have been prepared for the purposes of the principal proceeding in this Court. The persons sought to be examined on oath are involved in the preparation of the case in this Court. In these circumstances his Honour held that the proposed conduct would constitute a contempt of this Court and that the case justified the grant of an injunction to restrain the apprehended contempt.

At a glance

Court

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Judgment (208 paragraphs)

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Legislation Cited (12)

Cases Cited (14)

Re Sentry Corporation v Peat Marwick Mitchell and Co and Sentry Insurance A Mutual Company [1990] FCA 278; 24 FCR 463 (8 August 1990)