Stemcor (A/sia) Pty Ltd v Oceanwave Line SA

1 The plaintiffs in matter N1151 of 2002 seek leave under Order 27 of the Federal Court Rules to issue a subpoena for production (as defined in Order 27 rule 1 of the Rules) to a foreign party present in Germany and not present in Australia. 2 The solicitors for the defendant in matter N 1151 of 2002, Norton White, did not oppose the issue of the subpoena. There are related matters in the list in relation to other steel shipments on different vessels. Ebsworth & Ebsworth, the solicitors for the carrier in the these matters did oppose the issue of the subpoenas. The argument took place in relation to proceedings N 1151 of 2002. Any reference to the defendant in these reasons is a reference to the defendants in these related proceedings who opposed the issue of the subpoena. 3 The plaintiffs sue the defendant for damage to galvanised steel coils said to have been sustained on the voyage of the Ocean Breeze 91261 from the port of Yokahama to the port of Sydney. The voyage commenced in late October 2001. Thus, the voyage was from northern latitude of 35ş in late autumn, through the tropics and across the equator to southern latitude of almost 34ş south in late spring. The problems attending stowage, care and ventilation of such cargo from different temperatures and seasons across the humid tropics are or should be well known. See for example Sparks, Steel: Carriage by Sea (4th Ed, LLP), pp 257-76. 4 The plaintiffs apparently wish to obtain records from another vessel which they say will throw relevant light on the evidence in connection with the voyage of the Ocean Breeze 91261 and the lack of care said to have been exhibited by the defendants on the voyage in question. 5 The plaintiffs refer to s 38(1) of the Federal Court of Australia Act 1976 (Cth), Order 27 rule 2 of the Federal Court Rules and the Convention between the United Kingdom and Germany regarding Legal Proceedings in Civil and Commercial Matters done at London on 20 March 1928 and which entered into force on 15 March 1929, to which Australia became a party on 3 January 1933. 6 Article 2 of the said Convention provides as follows: When judicial or extra-judicial documents drawn up in the territory (to which this Convention applies) of one of the Contracting Parties are to be served on persons, partnerships, corporations or companies in the territory (to which this Convention applies) of the other, such documents may, without prejudice to the provisions of Articles 6 and 7 hereof, be served on the recipient in either of the ways provided in Articles 3 and 5. 7 It is submitted that a subpoena is a "judicial document" and so may be served in the manner provided by Articles 3 and 5. 8 A subpoena for production is an order of the court to attend before the Court and produce documents. Failure to comply with the order is said by the subpoena to be (as depending on the facts, it may be) a contempt of court punishable by arrest or sequestration. 9 The Convention in question deals with service. It does not provide or evidence agreement by Germany of courts in Australia ordering German citizens or corporations to comply with their orders on pain of punishment. 10 The first question, as a matter of logic, is whether s 38(1) of the Act and Order 27 r 2 of the Rules purport to authorise the issue of a subpoena outside Australia: that is, whether there is power to grant leave. The defendant says that they do not extend so far. Reliance was placed on Laurie v Carroll (1958) 98 CLR 310 and Ward v Interag Pty Limited [1985] 2 Qd R 552. 11 Though the Act and Rules are in a different form from that dealt with by Rogers CJ Comm D in Arhill Pty Ltd v General Percival Company (1991) 23 NSWLR 454, significant assistance is to be gained from his Honour's reasons in that case. 12 It is unnecessary for me to decide the question of power. At the moment I am not prepared to grant leave to issue the subpoena even assuming that the Court has power. I do not refuse to do so for any discretionary reason attendant upon an appreciation of the issues of the case. Rather, I would adopt the approach of Rogers CJ Comm D in Arhill and view the service of an order upon a German company demanding that it do something in Australia on pain of punishment in proceedings to which it has not submitted as such an invasion of German sovereignty as not to be contemplated except in the most exceptional circumstances (assuming there to be power). See also Mackinnon v Donaldson, Lufkin and Jennrette Securities Corporation [1986] Ch 482; and Gao v Zhu [2002] VSC 64. 13 Such a subpoena, if served, even using the methods contemplated by the Convention, is not capable of enforcement. Without other steps being taken to enlist German governmental assistance (whether executive or judicial), Australian courts cannot enforce compliance on pain of punishment. In the absence of enforcement procedures the order is an empty threat, or the equivalent of a mere request couched in imperative terms. The Court should not be seen to be engaged in such conduct. A similar view was expressed by Giles J in Aetna Pacific Securities v Hong Kong Bank of Australia Ltd (29 April 1993, NSWSC, unreported). 14 These matters may be seen to go to power as well as discretion. They may inform the more limited construction of s. 38 and O. 27 for which the defendant contends I need not decide this. 15 I indicated to the parties that I would hear the plaintiffs on discretion if I thought the Court had power. The discretion that I was then contemplating was one, which attended the circumstances of the case. Giles J in Aetna Pacific Securities put the matter in broad context, which includes the utility of the documents and the interests of justice. I would focus more upon the fact that in the absence of some method of eliciting the assistance of the German courts or authorities the subpoena is an order with a threat of punishment, which cannot be enforced. 16 Nevertheless, I should not foreclose the plaintiffs seeking to persuade me that I should exercise a power (which I only assume to exist for the purpose of the argument). However, it seems to me that the apparent interference with the sovereignty of another country and the lack of enforcement mechanisms make the exercise of any discretion inappropriate. Nevertheless, if the plaintiffs wish to put anything further to me, on discretion, they may do so. 17 If the plaintiffs wish to take the matter further it may be appropriate for me to raise with the Chief Justice the question of power being dealt with by a Full Court under s 20(1A) of the Federal Court of Australia Act 1976 (Cth). 18 I presently decline to grant leave to issue the subpoena.