Rio Tinto Zinc Corporation & ors v Westinghouse Electric Corporation

Supreme Court of NSW|2009-09-08|Before: Mathews AJ, Kirby J, Mr J

Introduction 1 This is an application by Boral Limited (Boral) to set aside a subpoena issued on the application of Monier Inc (Monier) pursuant to the request of a court in the USA.

2 In order to understand the issues involved, it is necessary to set out the background of the matter in some detail.

Background 3 On 15 August 1997 Monier & Boral Lifetile Inc (Boral Lifetile) entered into an operating agreement in the USA to establish a joint venture entity called MonierLifetile (MLT). Boral Lifetile is a wholly owned subsidiary of Boral.

4 Initially MLT distributed 100 per cent of its audited net profits to its members by way of dividends. However in about 2005 this policy changed so that only 50 per cent of MLT's audited net profit was to be distributed by way of dividend. In 2007 Monier commenced proceedings in the Chancery Court of Delaware State against both Boral Lifetile and MLT. It claimed that there had been a breach of the original operating agreement in that MLT had failed to distribute 100 per cent of its audited net profits in 2005, and had distributed none of its profits in 2006. It was Monier's case in the Delaware proceedings that the change from the 100 per cent dividend policy to the 50 per cent dividend policy came at a time when Boral had developed an interest in acquiring Monier's holding in MLT from Monier's parent company Lafarge S.A (Lafarge). This proposed acquisition was known within Boral as "Project Deliverance". Monier claimed that in reducing the dividend payments from 100 per cent to 50 per cent, Boral was seeking to make Monier's share in MLT less attractive to other prospective buyers, and thus available for Boral to purchase at a lower price.

5 On 27 May 2009 Monier applied to the Delaware Court, seeking that a letter of request be issued to the Supreme Court of New South Wales requiring Boral to produce certain documents to the Court. This application was made pursuant to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (1970) (Hague Convention). On 2 June 2009 the Delaware Court issued a letter of request as sought by Monier. The letter, addressed to this Court, set out the background of the litigation and requested the Court's assistance in obtaining the following documents: 1. Any internal Boral Limited documents or communications relating in any way to MLT's dividend policy;

Any internal Boral Limited documents or communications that refer or relate to Boral Limited's desire to purchase Lafarge S.A.'s fifty per cent interest in MLT, or a portion thereof.

6 On 10 June 2009 Monier applied to the Court by way of summons for leave to issue a subpoena to Boral for the production of the documents set out in the letter of request. Boral was not served with this summons, and on 22 June 2009 the matter came before Kirby J on an ex parte basis. His Honour was concerned that the orders framed by the Delaware Court did not specify a time period in respect of the documents to be produced. Accordingly the application was adjourned so that Monier could provide a time period for insertion in the subpoena. On 24 June, Kirby J ordered that Monier have leave to issue a subpoena for the production of such of the documents sought in the letter of request as were created between 1 September 1995 and 25 July 2007.

7 A subpoena in those terms was duly issued by Monier and served upon Boral. On 17 July 2009 Boral applied by notice of motion for the orders now sought, namely that the orders made by Kirby J, on 24 June 2009 be discharged and that the subpoena be set aside. It is this application which is now for determination by me. The matter has assumed much more significance than would normally attach to a relatively routine procedural application. At the hearing, which lasted the best part of a day, both parties were represented by very experienced Senior Counsel.

8 Before turning to discuss the issues involved, I should mention one further matter by way of background. On 12 August 2009 a separate application was lodged on behalf of Monier in the same Court file, pursuant to a further request from the Delaware Court. This request sought the examination on oath of four named persons who were employed by Boral during the relevant period. This application was initially contested by Boral, but at the hearing before me consent orders were handed up which effectively disposed of that aspect of the proceedings. Accordingly, this judgment deals only with Boral's application to set aside the subpoena issued against it.

Legislative Background 9 The NSW legislation which enables the courts to give effect to the Hague Convention is the Evidence on Commission Act 1995 (the Act). Sections 32 and 33, as relevant to these proceedings, are as follows: 32 Application to the Supreme Court for assistance in obtaining evidence for proceedings in other court (1)The following provisions of this Part apply if an application is made to the Supreme Court for an order for evidence top be obtained in the State and the Court is satisfied: (a) that the application is made in pursuance of a request issued by or on behalf of a court or tribunal exercising jurisdiction in a place outside the State, and (b) that the evidence to which the application relates is to be obtained for the purposes of proceedings which either have been instituted before the requesting court or whose institution before that court is contemplated. (2)… 33 Power of the Supreme Court to give effect to application for assistance (1)The Supreme Court has power, if an application is made under section 32, by order to make such provision for obtaining evidence in the State as may appear to the Court to be appropriate for the purpose of giving effect to the request in pursuance of which the application is made.

(2) An order under this section may require a specified person to take such steps as the Court may consider appropriate for that purpose.

(3) Without limiting the generality of subsections (1) and (2), an order under this section may, in particular, make provision as follows: (a) for the examination of witnesses, either orally or in writing, (b) for the production of documents, (c) for the inspection, photographing, preservation, custody or detention of any property, (d)… (e)… (f)…

(6) An order under this section must not require a person: (a) to state what documents relevant to the proceedings to which the application for the order relates are or have been in the person's possession, custody or power, or (b) to produce any documents other than particular documents specified in the order and appearing to the court making the order to be, or likely to be, in the person's possession, custody or power.

(7) A person who, because of an order under this section, is required to attend at any place is entitled to similar conduct money and payment for expenses and loss of time on attendance as is a witness in proceedings before the Supreme Court. 10 Before turning to discuss the issues involved, I should say that before the hearing Monier's legal advisors made significant amendments to the proposed subpoena. The documents now sought to be produced are as follows: 1. Any internal Boral Limited documents or communications that refer to or record MLT's dividend policy created during the period 1 September 1999 to 25 July 2007. 2. All documents generated or received by members involved in Project Deliverance (the MLT Steering Committee), and individuals reporting to these members, that refer to or record Boral Limited's desire to purchase Lafarge S.A's 50% interest in MLT, or a portion thereof, created during the period 1 September 1999 to 25 July 2007.

11 It is the subpoena in this re-drafted form which was the subject of submissions before me.

Boral's Submissions 12 Mr J. Halley SC, who appeared for Boral, submitted that there were three principal reasons why the subpoena should be set aside. First, it was submitted that the documents sought under the subpoena are not required for evidence in the Delaware proceedings but are rather sought by way of a fishing expedition (emphasis added). As such the matter falls outside the terms of s 32 of the Act, and the Court lacked jurisdiction to make the orders sought in the request. Second, it was submitted that the subpoena fails to comply with s 33(6)(b) of the Act in two respects. First, that provision requires that the particular documents sought be specified in the subpoena. Neither the subpoena as issued nor its reformulation complies with this requirement. Second, there was nothing before the Court to show that these documents were likely to be in Boral's possession, custody or power. The third matter relied on by Mr Halley is that it would be oppressive to Boral to require it to produce the documents sought in the subpoena, even in its reformulated version, given the potential number and breadth of those documents. Accordingly, the Court should, in its discretion, have declined to order the issue of the subpoena. 13 It goes without saying that the primary matters for determination relate to the jurisdictional issues under ss 32 and 33 of the Act. Only if those issues are resolved adversely to Boral will it be necessary to turn to the discretionary issue arising from the claimed oppression.

14 Of the jurisdictional issues it is appropriate to deal first with the requirement, in s 33(6)(b) of the Act, that a person cannot be required to "produce any documents other than particular documents specified in the order." Mr R. McHugh SC, who appeared for Monier, rightly conceded that this is the pivotal issue upon which this application is likely to hinge.

Are the documents specified with sufficient particularity? 15 I am told by Counsel that there is no Australian authority relating to the issue of subpoenas under ss 32 and 33 of the Act. Such authorities as do exist relate to the taking of evidence on commission under these provisions. There is, however, English authority directly on point, to which I now turn.

16 I should say by way of preface that the relevant UK legislation is, in all relevant respects, identical to s 33(6)(b). Section 2(4)(b) of the Evidence (Proceedings in Other Jurisdictions) Act 1975 (UK) provides that:

(4) An order under this section shall not require a person (a)… (b) to produce any documents other than particular document specified in the order as being documents appearing to the court making the order, to be, or be likely to be, in his possession, custody or power.

17 The first case of relevance is Rio Tinto Zinc Corporation & ors v Westinghouse Electric Corporation [1978] A.C 547 (Westinghouse). In that case the High Court in London had received letters rogatory from a court in Virginia USA seeking, inter alia, the production of documents listed on an attached schedule. In some cases the schedule listed particular specified documents, but in other cases it set out categories or classes of documents which were sought. Lord Diplock noted that, insofar as the schedule included categories and classes of documents, these were obtainable under an English order for discovery, but could not be called for under the 1975 Act. His Lordship made the following observation (p 635): "The requirements of s 4(b), however, are not in my view satisfied by the specification of classes of documents. What is called for is the specification of "particular documents" which I would construe as meaning individual documents separately described."

18 In re Asbestos Insurance Coverage Cases [1985] 1 All E.R 716 (In re Asbestos), the House of Lords considered the validity of a request from a US court to produce the following documents: "…(b) the written instructions from the Plaintiffs or their agents to Sedgwick to obtain the insurance policies set forth in exhibit 1, hereto… (g) the written instructions to Sedgwick from the Plaintiffs or their agents to obtain the insurance policies referred to in (f) above…" 19 By way of background, it should be noted that exhibit 1, referred to in paragraph (b), contained a list of policies. Lord Fraser, in a speech with which the other Lords agreed, observed that s 2(4) was inserted in the legislation in order to give effect to the UK government's stand that the UK would not execute letters of request issued for the purpose of obtaining pre-trial discovery of documents. His Lordship went on to consider whether paragraphs (b) and (g) of the letters of request specified "particular documents" so as to comply with s 2(4)(b). He noted that the House of Lords in Westinghouse had been emphatic that the expression "particular documents specified in the order" should be given a strict construction. He continued (p 721): "I do not think that by the words 'separately described' Lord Diplock intended to rule out a compendious description of several documents provided that the exact document in each case is clearly indicated. If I may borrow (and slightly amplify) the apt illustration given by Slade LJ in the present case, an order for production of the respondents' 'monthly bank statements for the year 1984 relating to his current account' with a named bank would satisfy the requirements of the paragraph, provided that the evidence showed that regular monthly statements had been sent to the respondent during the year and were likely to be still in his possession. But a general request for 'all the respondent's bank statements in 1984' would in my view refer to a class of documents and would not be admissible. The second test of particular documents is that they must be actual documents, about which there is evidence which has satisfied the judge that they exist, or at least that they did exist, and that they are likely to be in the respondents' possession. Actual documents are to be contrasted with conjectural documents, which may or may not exist".

20 His Lordship concluded that paragraphs (b) and (g) of the letters of the letters rogatory failed both tests set out in s 2(4)(b).

21 As already mentioned, there is no Australian authority relating to the production of documents under ss 32 and 33 of the Act. However the legislation generally was discussed by Spigelman CJ in an extremely thorough and informative judgment in British American Tobacco Australian Services Limited & ors v Eubanks (2004) 60 NSWLR 483 (BATAS). That case related to the obtaining of evidence on commission in compliance with a request from a US court. However the Chief Justice's detailed exposition of the history of the legislation and the principals underpinning it are equally relevant to the issues raised here. The Chief Justice referred to the clear distinction which the legislation draws between evidence and discovery. At page 497 he made the following observation: "[33] One commentator has characterised the use of the word "evidence" in the Convention as a reference to "material to prove or disprove facts in issue" and distinguishes such from "material which may lead to the discovery of evidence". (See L Collins, Essays in International Litigation and the Conflict of Laws, for example, at 295 and 304.) The reference to facts being "in issue" may need to be qualified by reason of the reference in the Convention to proceedings that were merely "contemplated". Otherwise this distinction is well made." 22 At page 498 Spigelman CJ referred to the fact that any order for production of documents is to be limited, pursuant to s 33(6)(b), to "particular documents specified in the order". The Chief Justice did not attempt any further explanation of these words, it being unnecessary for the purposes of that case. A little later he made lengthy observations relating to the Australian scheme (p 498): "[41] The history of the Australian scheme indicates that the British case law should generally be followed in Australia. The general principle that an international treaty of this character should be interpreted, where possible, in an internationally uniform way (see Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161 at 176 [38], 214 [138]) is reinforced in Australia by the adoption, in terms, of the 1975 English statute which had already been construed in Rio Tinto v Westinghouse .

[42] Burnton J, in Gredd v Arpad Busson (at [27]), has summarised the English law in a manner that, in my opinion, should be adopted in Australia: "(1) Comity requires this court to view a letter of request issued by a foreign court for the purpose of civil proceedings before it benevolently. It is our pleasure and duty to assist those courts and the parties to them in arriving at a fair and just determination of their civil litigation where we can properly do so. (2) Nonetheless when an application for an order under the Act is disputed, the High Court must determine whether the order sought is one which it can or should properly make. (3) The issue whether the order sought is for an illegitimate investigation rather than to obtain evidence to be adduced at trial is to be determined principally by reference to the terms of the letter of request and of the proposed order of this court. However, the court will consider the evidence before it as a whole. (4) Particularly pertinent will be the stage at which the order is sought and the extent to which the party seeking the order is able to demonstrate that the information sought is relevant to issues in the foreign proceedings in the sense of being capable of being adduced at trial in support of those issues. (5)… (6) Statements in a letter of request to the effect that evidence is sought for use at trial are relevant but not conclusive. The letter of request must be viewed as a whole."

23 The Chief Justice also dealt at length with the issue of oppression. However as I have already indicated, this issue will only become relevant in this case if the subpoena, in its revised form, otherwise complies with the requirements of ss 32 and 33 of the Act. 24 In seeking to support the validity of the subpoena, Mr McHugh pointed to the terms of Monier's application to the Delaware Court for the letter of request. It was emphasised there that the documents were not sought as evidence in the nature of pre-trial discovery, but rather as evidence in the nature of proof to be used at trial. On the other hand, the application later goes on to say: "Accordingly, the requested Boral Limited documents may shed light on the bona fides of Boral Limited and Boral Lifetile's current position on dividend policy". (emphasis added)

25 These two statements seem to me to be inherently contradictory.

26 Mr McHugh submitted that it will be sufficient compliance with the first limb of s 33(6)(b) if the subpoena specifies an objective criterion by reference to which the documents can be identified, in other words if the subpoena specifies that the documents "record or refer to" particular matters. He submitted that I should adopt a beneficial and purposive construction of the legislation, as opposed to the restricted approach adopted in the U.K. This, Mr McHugh submitted, accords with the approach approved by Spigelman CJ, namely that this Court should view benevolently any letter of request issued by a foreign court.

27 One of the difficulties with this proposition is that Spigelman CJ, in the same case, emphasised that the British case law on this subject should generally be followed in Australia, given that it relates to an International treaty which should be interpreted, where possible, in an internationally uniform way. In any event the English authorities do little more, in my view, than reproduce the clear words of the section. Section 33(6)(b) requires, relevantly, that any documents to be produced under that section must be "particular documents specified in the order". It is difficult to construe this provision as meaning anything other than "individual documents separately described" (per Lord Diplock in Westinghouse). 28 On the other hand, the construction urged by Mr McHugh on behalf of Monier, namely that it is sufficient if the subpoena specifies an objective criterion by which the documents can be identified, does not in my view accord with the clear terms of the section, namely that the particular documents are to be specified in the orders (emphasis added). 29 In the result, I am firmly of the view that the subpoena issued on behalf of Monier, even in its revised form, fails to comply with the primary requirement of s 33(6)(b). This being the case, it is unnecessary to discuss the NSW cases, referred to by Mr Halley, relating to notices to produce. 30 This however is not necessarily the end of the matter. For a question remains as to whether the terms of the subpoena can be further remoulded so as to comply with the legislation and avoid oppression to the recipient.

Can the subpoena be remoulded? 31 As Spigelman CJ made clear in BATAS, the Court should only reject a request from a foreign court if it is unable to mould an order so as to give effect to the request in an appropriate manner. Although the Chief Justice was referring there to remoulding for the purpose of removing oppression, his comments would apply equally to remoulding a subpoena by restricting its scope so as to comply with the legislation. Similarly, the House of Lords in Westinghouse confirmed that it was open to the courts to attempt to limit the scope of documents sought in a letter of request. However, as Lord Diplock emphasised, the court does not have power to substitute a different category of documents for the category which has been requested by the overseas court. 32 The documents currently sought in both paragraphs of the redrafted subpoena are identified and identifiable only by reference to their class or category. It is for this reason that they do not comply with the requirement of specificity imposed by s 33(6)(b). This generality of description is relevant not only to the validity of the subpoena; it also makes it impossible to remould it into a request for specific documents. Any attempt to do so would fundamentally alter the nature of Monier's request. Nor does the Court have the information which would enable it to describe the "exact documents" as part of a compendious description of several documents (see Lord Fraser in In re Asbestos, para [19] above).

Conclusion 33 It follows from all I have said that Boral's application must succeed. Accordingly I make the following orders: 1. Orders 1 to 6 made by Kirby J on 24 June 2009 are discharged; 2. The subpoena to produce documents issued to Boral at the request of Monier on 24 June 2009 is set aside; 3. Monier is to pay Boral's costs of the notice of motion

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Application of Monier Inc [2009] NSWSC 986

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