Sharon Y Eubanks, being the person nominated by the United States District Court for the District of Columbia in proceedings United States of America v Phillip Morris Incorporated et al Civil Action No.99-CV-2496

Sharon Y Eubanks, being the person nominated by the United States District Court for the District of Columbia in proceedings United States of America v Phillip Morris Incorporated et al Civil Action No.99-CV-2496 - [2003] NSWSC 386 - NSWSC 2003 case summary — Zoe

CITATION : Sharon Y Eubanks, being the person nominated by the United States District Court for the District of Columbia in proceedings United States of America v Phillip Morris Incorporated et al Civil Action No.99-CV-2496 (GK), for the purposes of applying for orders under section 33 of the Evidence on Commission Act 1995 [2003] NSWSC 386 HEARING DATE(S) : 1/5/03 JUDGMENT DATE : 9 May 2003

Evidence Act 1995 LEGISLATION CITED : Evidence on Commission Act 1995 Evidence (Evidence on Commission) Amendment Act 1988 Supreme Court Rules 1970 Australian Securities Commission v Marlborough Goldmines Ltd (1993) 177 CLR 485 Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 The Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Forsyth; Re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327 In the Will of Sheppard [1972] 2 NSWLR 714 Lenning v Alexander Proudfoot Company World Headquarters (unreported) NSWCA, 22 April 1991 McCabe v British American Tobacco Australian Services Ltd [2002] VSC 73 CASES CITED : National Australia Bank Ltd v Idoport Pty Ltd [2000] NSWCA 8 National Mutual Holdings Pty Limited v The Sentry Corporation (unreported) FCA, 30 May 1990 Newcastle City Council v Kern Land Pty Ltd (unreported) NSWSC, 9 December 1996 NSW Commissioner of Police v Tuxford [2002] NSWCA 139 Pickles v Gratzon [2002] NSWSC 688 Principal Registrar of the Supreme Court v Ali Tastan (1994) 75 A Crim R 498 Schutt v Queenan [2000] NSWCA 341 Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710 Westpac Banking Corp v Abemond Pty Ltd (unreported) NSWSC, 28 October 1994 PARTIES : Sharon Y Eubanks, being the person nominated by the United States District Court for the District of Columbia in proceedings United States of America v Phillip Morris Incorporated et al Civil Action No.99-CV-2496 (GK), for the purposes of applying for orders under section 33 of the Evidence on Commission Act 1995 FILE NUMBER(S) : SC 13177/02 COUNSEL : Dr Bell (Plaintiff/Respondent) Mr M.R. Speakman / Ms K. Richardson (Applicant) SOLICITORS : Ebsworth & Ebsworth (Plaintiff/Respondent) Gilbert & Tobin (Applicant)

12 The Letter of Request recites that the US proceedings are within the jurisdiction of the US District Court. The claims asserted in the US proceedings arise out of alleged violations of the United States' racketeering laws. The plaintiff's complaint in the US proceedings alleges, inter alia, that not later than 1953 the defendant companies entered into a conspiracy to deceive consumers into starting and continuing to smoke, without regard to the truth or the health consequences to the American people. Various acts and omissions said to evidence the conspiracy are set out. 13 The Letter of Request repeats information placed before the US District Court by the plaintiff in support of its issue. A number of assertions are made about the applicant. These include: (i) that he is the former long-time senior solicitor and head of the legal department of British American Tobacco Company Limited (BATCo) in the United Kingdom, (ii) his responsibilities included devising and implementing document management policies for BATCo and the implementation of BATCo's world-wide document management, retention and destruction policies, (iii) his responsibilities also included managing the flow of documents between BATCo and its United States affiliate, Brown & Williamson, (iv) the document management policy resulted in the destruction of relevant documents for the purpose of preventing the discovery of documents in litigation in the United States and otherwise, (v) in the mid-1990's he took up fulltime employment with WD & HO Wills in Australia, (vi) he participated in policies and practices that resulted in the destruction of relevant documents in the United Kingdom and elsewhere, including Australia. 14 The Letter of Request sets out those paragraphs of the plaintiff's amended complaint in the US proceedings that allege that the defendants destroyed smoking and health related documents. It recites that the Court is authorised by rule 28(b) of the Federal Rules of Civil Procedure and 28 United States Code 1781 and 1782 to issue the Letter of Request. There follows the request by Judge Kessler, US District Court Judge that the applicant be summonsed to appear before this Court, or a competent person appointed by it, for the purpose of giving evidence relating to the topics set out therein. The topics relate to the creation of the document management policy, the implementation of that policy, the rules and procedures set forth by that policy, the destruction of smoking and health documents pertaining to BATCo and Brown & Williamson's litigation position in the United States and the transportation, routing, storage and warehousing of documents. The Applicant's Case on the Principal Motion 15 The applicant seeks, on the hearing of his principal motion, that the orders be set aside upon the following grounds: (i) They were made beyond power; or (ii) If not made beyond power, this Court should, in the exercise of its discretion, decline to make the orders sought in the Letter of Request on the grounds of oppression. Four grounds of oppression are identified in written submissions that have been filed on the applicant's behalf in support of the principal motion. They are as follows: (a) The examination is directed to whether the applicant engaged in conduct that under the United States law constitutes both: (i) an offence; and (ii) a serious civil wrong; (b) The testimony sought to be obtained in the examination could be used against the applicant even if he were to claim privilege against self-incrimination: (i) In these or in later civil or criminal proceedings brought by the Department of Justice; and (ii) In any other civil or criminal or disciplinary proceedings brought by anyone else anywhere in the world; (c) The court cannot control the later use of the examination testimony; and (d) The examination is so widely framed as to be oppressive. 16 The ground that the orders are beyond power involves two discrete areas of challenge. The first is not relevant to the present determination. The second basis is that the Letter of Request was issued for a purpose other than the US proceedings being a purpose that is "investigatory". It is the applicant's case that the DOJ and a firm of solicitors based in Melbourne, Slater & Gordon, have been cooperating by exchanging material obtained in one tobacco proceeding for use in another proceeding. It is the applicant's submission that should the Court find that the Letter of Request to have been issued for a purpose that included an impermissible purpose the jurisdiction conferred by s 33 of the Act is not enlivened (alternatively, as a matter of discretion the orders should be set aside). The Principles 17 Part 36 r 16(1) of the SCR provides that where a party to any proceedings serves on another party a notice requiring the party served to produce at any hearing in the proceedings any document or thing for the purpose of evidence and the document or thing is in the possession, custody or power of the party served, the party served shall, unless the court otherwise orders, produce the document or thing in accordance with the notice, without the need for any subpoena for production. The effect of the rule is to impose an obligation to comply with a notice to produce similar to the obligation that exists with respect to a subpoena; Bailey v Beagle Management Pty Ltd [2001] FCA 60; 105 FCR 136.

18 The principles that apply in dealing with an application to set aside a subpoena are as stated by Jordan CJ in The Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574-575: "Where the subpoena is addressed to a party, it is still necessary that it should state with reasonable particularity the documents which are to be produced : A.-G. v Wilson (7) Sim 526 at 529; Earl of Powis v Negus [1923] 1 Ch 186 at 190. It is true that a party, unlike a stranger, can be required to give discovery; but it is not legitimate to use a writ of subpoena duces tecum as a substitute for an application for discovery of documents, or as an alternative to an application for further and better discovery. Discovery applications should be made at the proper time and place. It would greatly impede the trial of actions at nisi prius , and impose an intolerable burden upon the presiding judge, if he were required from time to time to suspend proceedings and wade for himself through masses of documents for the purpose of endeavouring to determine whether any of them are relevant. Especially is this so when the documents may be called for whilst the case is still at the stage when it is difficult or perhaps impossible for the Judge to know what may become relevant and what may not. In the absence of special circumstances, eg Griebart v Morris [1920] 1 KB 659, a party is no more entitled to use a subpoena duces tecum than he is a summons for interrogatories, for the purpose of "fishing", ie, endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all; Hennessy v Wright (24 KBD 445 at 448) or to discover the nature of the other side's evidence: Griebart v Morris (at 666). Even if the documents are specified, a subpoena to a party will be set aside as abusive if great numbers of documents are called for and it appears that they are not sufficiently relevant: Steele v Savory [1891] WN 195." 19 In Travel Compensation Fund v Blair [2002] NSWSC 1228 McClellan J collected a number of the authorities since Small dealing with the circumstances in which a subpoena will be set aside and the circumstances in which a court will refuse inspection of documents produced on subpoena in the absence of identification of the legitimate forensic purpose for which access is sought. In the latter respect his Honour referred to NSW Commissioner of Police v Tuxford [2002] NSWCA 139 and Principal Registrar of the Supreme Court v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ (as his Honour then was) at 504. Significant to the issues raised by this application is McClellan J's observation that the principle that a subpoena is not be used by a party to litigation for the purpose of fishing is one that requires careful consideration. His Honour noted that a subpoena is less likely to be set aside if the information that it seeks is exclusive to the other party. In this respect he cited Newcastle City Council v Kern Land Pty Ltd (unreported) NSWSC, 9 December 1996 and Schutt v Queenan [2000] NSWCA 341 per Mason P at [14]. The Court in Bailey v Beagle Management observed that the concept of fishing is one that has undergone substantial re-thinking in recent years (at 143).

22 Dr Bell submitted that in considering the scope of a subpoena addressed to a party it is appropriate to have regard to the refinement of the scope of discovery effected by the amendment of Pt 23 of the SCR. It is no longer sufficient that a document if discovered might lead an opposing party to a train of inquiry which might advance that party's case or damage the discovery party's case; National Australia Bank Ltd v Idoport Pty Ltd [2000] NSWCA 8.

37 The question of whether the existence of an improper purpose (albeit not the dominant purpose) operates to invalidate the orders will be in issue on the hearing of the principal motion. The applicant's proposition does not find support in Application of Forsyth; Re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327 per Clarke J at 333. However, as Mr Speakman noted in National Mutual Holdings Pty Limited v The Sentry Corporation (unreported) FCA, 30 May 1990, Northrop J dealing with the Evidence (Evidence on Commission) Amendment Act 1988 took a different approach. Dr Bell referred me to the decision of O'Keefe J in Pickles v Gratzon [2002] NSWSC 688, dealing with the provisions of the Act, and informed me of a decision of the Queensland Court of Appeal dealing with the equivalent legislation both of which followed the approach adopted by Clarke J in Forsyth. 38 The Act forms part of uniform State legislation giving effect to the Hague Convention and falls within that category of State legislation to which the observations of the High Court in Australian Securities Commission v Marlborough Goldmines Ltd (1993) 177 CLR 485 apply. Dr Bell acknowledged that he could not shut the applicant out from agitating that a subordinate improper purpose would invalidate the orders. However, in his submission in weighing up the competing considerations to which reference was made in Southern Pacific Hotel I might take into account that the judge hearing the principal motion will be constrained not to depart from the decision of the Queensland Court of Appeal unless convinced that it is plainly wrong.

(1993) 177 CLR 485

(2001) 105 FCR 136

(1984) 2 NSWLR 327

[2002] NSWCA 139

[2000] NSWCA 341

[2002] NSWSC 1228

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