Sykes v Richardson

JUDGMENT 1 HIS HONOUR: The respondent to the present motion, Julius N Richardson, is counsel for the plaintiffs in civil proceedings for damages in the United States District Court for the Western District of Wisconsin. On 22 March 2007 he filed a summons in this Court seeking an order, under s33 of the Evidence on Commission Act 1995 (NSW), for the examination of a witness, Ms Kieran Sykes, for the purpose of those proceedings. Ms Sykes is the applicant in the motion. 2 On 29 March 2007 Patten AJ made the order, ex parte, together with certain ancillary orders. Accordingly, a subpoena was issued to the applicant to attend for examination. That examination was to take place on Monday, 30 April, but the parties accepted that it could not proceed on that day. However, the trial in Wisconsin is to commence on 29 May and a pre-trial conference has been fixed for 24 May. If the examination is to proceed, it must be conducted before that conference. 3 The motion before me seeks, among other things, that the order of Patten AJ and the subpoena be set aside. It raises a question of law concerning the effect of a provision in the Evidence on Commission Act, as well as discretionary considerations relating to the applicant's health. In this judgment I shall deal only with the question of law. In the circumstances, the matter must be dealt with urgently and time does not admit of detailed reasons for my decision. I am indebted to senior and junior counsel for both parties for helpful written submissions, developed orally. 4 In the request for the order for examination of the applicant which was before Patten AJ, the proceedings in Wisconsin are described as "a civil action arising out of the alleged involvement of [a named company] in a conspiracy to manipulate the copper futures market from 1993 through 1996 in violation of the Sherman Antitrust Act". The fundamental allegation in the complaint initiating those proceedings is that, over a period of six years, the company "and its co-conspirators engaged in a continuing combination, conspiracy and agreement to manipulate and fix, raise and maintain the prices of physical copper". That conspiracy was said to be a violation of s1 of the Sherman Act. Contravention of that section amounts to a felony, carrying a substantial term of imprisonment and an equally substantial fine. 5 Section 33 of the Evidence on Commission Act (to which I shall refer as "the Act") is to be found in Pt 4, which provides for the taking of evidence for foreign and Australian courts. By s32 an application for that purpose may be made to this Court. However, s32(2) provides: This Part does not apply in respect of proceedings relating to the commission of an offence or an alleged offence unless the requesting court is a court of a place in Australia or of New Zealand. 6 It is submitted for the applicant that the order for examination and the subpoena should be set aside because the proceedings in Wisconsin should be characterised as "relating to the commission of an offence…". Counsel for the applicant referred to a number of other paragraphs in the complaint in support of the proposition that the conduct alleged is criminal in its nature. I have on affidavit unchallenged expert evidence about the relevant law in the United States, both substantive and procedural. In the event, it is not necessary to examine the complaint in any detail. It is common ground that it alleges behaviour which would be in breach of the criminal law in the United States. 7 Reliance is also placed upon the fact that treble damages are sought, so as to be penal rather than purely compensatory. That is a matter to which I shall return. 8 The essential issue is whether the proceedings relate to the commission of an offence in the relevant sense. Section 3 of the Act provides that expressions used in it which are defined in the Evidence Act 1995 have the meanings set out in that Act. In Pt 1 of the dictionary to the Evidence Act, "offence" is defined as "an offence against or arising under an Australian law". Counsel for the respondent submitted that that definition is applicable to the term "offence" in s32(2), so that the subsection does not bear upon the present proceedings because it is contravention of American law which is alleged. 9 Section 6 of the Interpretation Act 1987 provides that definitions in an Act apply to the construction of that Act "except insofar as the context or subject matter otherwise indicates or requires". Having regard to the apparent legislative purpose of s32(2) of the Act, and its exception from its terms of a requesting court of a place in Australia or of New Zealand, it seems to me that the context requires that the term "offence" be interpreted so as to embrace an offence under the law of any country which issues a request under the section. However, it is not necessary to determine that matter because I am persuaded that, in any event, the Wisconsin proceedings are not "proceedings relating to the commission of an offence or an alleged offence" within the terms of the subsection. 10 Clearly, in their form the proceedings are civil, not criminal. The plaintiffs are private parties, who do not represent the State and could not institute a prosecution under the Sherman Act. The civil standard of proof applies. The plaintiffs seek damages and, obviously, do not and could not seek the imposition of fines or imprisonment. In short, success by the plaintiffs could not establish the commission of an offence, so as to expose anyone to criminal sanction, because the case would be conducted without the standard of proof and rules of procedure characteristic of criminal proceedings. 11 All of this counsel for the applicant acknowledge. However, they note that s32(2) does not use the expression "criminal proceedings" (a term which is itself defined in the Evidence Act). Rather, it refers to proceedings "relating to" the commission of an offence, and counsel rely upon the breadth of that expression. 12 Reference was made to Lionsgate Australia v Macquarie Private Portfolio [2007] NSWSC 318, in which Austin J at [31]-[33] examined authorities on the expression "in relation to" and its grammatical variants. His Honour noted that those expressions have been held to be "words of very wide connotation", although they must "take colour from the context in which they appear". One of the cases to which his Honour referred was Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. In the joint judgment in that case at [87], it was said that the words "relate to" require the existence of a "connection or association" between the matters of which a relationship is posited by a statutory provision, their Honours adding that the connection or association "must be a relevant one" and cannot be "accidental" or "remote". 13 Counsel argue that this line of authority provides guidance in the present case. Although the Wisconsin proceedings are civil, it is said, they have as their subject matter - indeed, at their very core - alleged conduct which on its face is criminal. That being so, it is contended that there is a relevant connection or association between the proceedings and "the commission of an offence or an alleged offence". 14 As I have said, counsel also rely upon the fact that the plaintiffs seek treble damages. Should authority be needed for the proposition that damages of that kind are penal, rather than simply compensatory, it is to be found in John Robinson and Co Ltd v Ferguson Transformers Pty Ltd (1972-73) 129 CLR 65, in which the High Court considered s11 of the Australian Industries Preservation Act 1906 - 1950 (C'th), a provision copied from the Sherman Act. Mason J (as he then was) wrote (at [96]): An action under s11 of the Australian Industries Preservation Act is an action for treble damages. The plaintiff is not limited to the recovery of the damage which he has actually sustained. Under the statute he is entitled to recover three times the amount of his damage. The judgments of Dixon CJ and Menzies J in Redfern v Dunlop Rubber Australia Ltd [(1964) 110 CLR 194, at pp 209, 223] make it clear that to give a person injured by the commission of an offence a right to recover treble damages from the wrongdoer is a device to ensure compliance with the law and to discourage disobedience to the law. The action is therefore an action for penalties or damages in the nature of penalties. 15 The Act was passed pursuant to the 1970 Hague Convention on the taking of evidence abroad in civil or commercial matters, to which Australia acceded in 1992. The Convention does not define the expression "civil or commercial matters". An explanatory document issued by the Commonwealth's Secretariat in 1979 discussed circumstances in which a request by a country for the taking of evidence might be refused, and noted that "…experts agreed that it was quite proper to reject a request if the evidence sought could be directly linked to a penal (or tax) proceeding in the requesting country". 16 Counsel for the applicant note that the Act does not, by its terms, confine the operation of Pt 4 to "civil or commercial matters". This is in contrast to the legislative implementation of the Convention in England, the Evidence (Proceedings in Other Jurisdictions) Act 1975. That Act was examined by the House of Lords in In re Norway's Application (Nos. 1 & 2) [1990] 1AC 723. Relevant sections of the Act are to be found in the speech of Lord Goff at 794. Section 1 provides for applications for the taking of evidence "for the purposes of civil proceedings…". By s9(1), "civil proceedings" are defined as "proceedings in any civil or commercial matter" in the requesting court. 17 For the purposes of the present motion, it is not necessary to examine the decision in that case. The point made by counsel is that the English legislation chose to use the language of the Convention in delineating the class of proceedings in which a request for assistance might be made, whereas the approach of the Act is different. Part 4 of the Act begins with s31, in which the term "proceedings" is defined exhaustively, so as to include "any civil or commercial matter" and proceedings "in relation to the commission of an offence or an alleged offence". The scope of proceedings in which a request might be made is then limited by what Mr Leeming SC, for the applicant, described in oral argument as the "carve out" effected by s32(2). This is said to support the argument that the expression "proceedings relating to the commission of an offence…" should be construed broadly. 18 Counsel also rely upon the long standing principle that domestic courts will not entertain an action for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State: Attorney General (United Kingdom) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30, in the joint judgment at 40. Their Honours referred (at 41) to the advice of the Privy Council in Huntington v Attrill [1893] AC 150, in which Lord Watson explained the principle in this way (at 156): The rule has its foundation in the well-recognised principle that crimes, including in that term all breaches of public law punishable by pecuniary mulct or otherwise, at the instance of the State Government, or of some one representing the public, are local in this sense, that they are only cognizable and punishable in the country where they were committed. Accordingly no proceeding, even in the shape of a civil suit, which has for its object the enforcement by the State, whether directly or indirectly, of punishment imposed for such breaches by the lex fori, ought to be admitted in the Courts of any other country. 19 Counsel fasten on the phrase, "even in the shape of a civil suit" in that passage, and point to the provision for treble damages in the Wisconsin proceedings. They argue that to comply with the request to take evidence from the applicant would amount to a step, albeit indirect, in the enforcement of a penal law in the United States. 20 It is convenient to deal with that last argument first. In my view, the principle is directed at proceedings in another country of a public nature, having as their object the enforcement of the criminal, regulatory or revenue law of that country. This becomes clear from a later passage in Huntington v Attrill. The case was concerned with civil proceedings in Ontario, in which a provision of a New York statute concerning the responsibility of officers of a corporation was involved. Lord Watson said at 157-8: A proceeding, in order to come within the scope of the rule, must be in the nature of a suit in favour of the State whose law has been infringed. All the provisions of Municipal Statutes for the regulation of trade and trading companies are presumably enacted in the interest and for the benefit of the community at large; and persons who violate these provisions are, in a certain sense, offenders against the State law, as well as against individuals who may be injured by their misconduct. But foreign tribunals do not regard these violations of statute law as offences against the State, unless their vindication rests with the State itself, or with the community which it represents. Penalties may be attached to them, but that circumstance will not bring them within the rule, except in cases where these penalties are recoverable at the instance of the State, or of an official duly authorized to prosecute on its behalf, or of a member of the public in the character of a common informer. An action by the latter is regarded as an actio popularis pursued, not in his individual interest, but in the interest of the whole community. 21 Despite the punitive nature of the treble damages sought, the Wisconsin proceedings are clearly not public proceedings of that kind. In any event, I consider that to assist those proceedings by obtaining the evidence of the applicant falls short of a step, even indirect, in the enforcement of a United States penal law. I think that there is force in the argument of counsel for the respondent that the principle could come into play only if the plaintiffs in those proceedings, having obtained judgment, had occasion to seek the enforcement of the judgment in this country. In that event, an Australian court might decline to enforce so much of the judgment as was found to be penal rather than compensatory. Dr Bell SC, for the respondent, referred me to a decision of Bergin J in Schnabel & Ors v Lui & Ors [2002] NSWSC 15, in which her Honour took such a course: see the judgment at [161]ff. 22 Let me return, then, to the argument concerning the interpretation of s32(2). Counsel for the respondent submit that the expression "proceedings relating to the commission of an offence…" means criminal proceedings, that is, proceedings having as their focus the determination whether an offence has been proved and, if so, what the appropriate punishment (if any) should be. Clearly, the Wisconsin proceedings are not of that kind. I have not found this matter easy to resolve, and I acknowledge the force of the arguments of counsel for the applicant. However, I find the submission of counsel for the respondent persuasive. 23 Adopting the words of Austin J to which I have referred, the terms of s32(2) must take their colour from their context. Presumably, the fact that the Convention is confined to civil and commercial matters has its rationale in the principle expounded in Huntington v Attrill. In my view, it is that same principle, recognising the local nature of criminal proceedings, which informs the limitation in the subsection. It is for that reason that requests from courts within Australia or in New Zealand are excepted. Provision for requests from New Zealand in respect of criminal matters is made in recognition of the close ties between the two countries and the common lineage of their criminal justice systems. 24 That approach, it seems to me, accords with the policy of both the Convention and the Act, which encourages international assistance in matters which are not criminal. In Gredd v Arpad Busson [2003] EWHC 3001 at [27], Burnton J summarised the relevant English law. That summary included the following: 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.

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