Devine Erby Mazlin (Qld) Pty Ltd and ORS v Holiday Villages (Australia) Pty Ltd B58/1996 [1997] HCATrans 204 (26 June 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B58 of 1996

B e t w e e n -

DEVINE ERBY MAZLIN (QLD) PTY LTD, HAYSOM GROUP ARCHITECTS PTY LTD, JOHN FOWELL, CHRIS EVERDING, MALCOLM MIDDLETON and ED HAYSOM

Applicants

and

HOLIDAY VILLAGES (AUSTRALIA) PTY LTD

Respondent

Application for special leave to appeal

BRENNAN CJ

TOOHEY J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 26 JUNE 1997, AT 10.17 AM

Copyright in the High Court of Australia

MR W. SOFRONOFF, QC: May it please the Court, I appear with my learned friend, MS J.H. DALTON, for the applicants. (instructed by Gadens Ridgeway)

MR P.A. KEANE, QC: May it please the Court, I appear with MR A.M. DAUBNEY for the respondent. (instructed by Colin Biggers & Paisley)

BRENNAN CJ: Yes, Mr Sofronoff.

MR SOFRONOFF: Your Honours, I only want to address one point. Could I invite your Honours to look at The Sentry Corporation v Peat Marwick Mitchell & Co [1990] FCA 278; 24 FCR 463. In that case there were two proceedings on foot, one proceeding in the United States and one here. Sentry and Peat were both defendants in proceedings in Australia. Sentry's holding company sued Peat in the United States and obtained an order that officers and employees of Peat Marwick could be examined by way of deposition in this country in aid of the American proceedings.

It was argued successfully before the trial judge that that constituted an abuse of process or a contempt. Could I ask your Honours to go to page 493 to the reasons of Justice Lockhart at about point 7 in the paragraph beginning "In my opinion". Could I invite your Honours to read that paragraph.

KIRBY J: Disembodied from the rest of the case, it is not entirely clear what you want to get out of it because it is obviously dealing with this particular case.

MR SOFRONOFF: Yes. Your Honour, what I want to get out of it is that in the Sentry Case the Full Court of the Federal Court accepted that to place witnesses in a proceeding in a position where they could be cross-examined by way of a roving inquiry with no limitation upon the use that could be made of their evidence given at that proceeding for the purposes of the second proceeding constituted an unfairness such that that step would be prevented. His Honour Justice Lockhart did not identify, or at least did not articulate fully, what was the unfairness in the passage to which I have directed your Honours. But that was done in an earlier case, Burrill v Jolley (1990) 2 ACSR 817 at 831, which is on our list. I would ask your Honours to look at that, or I can read the passage to your Honours.

TOOHEY J: Before you go to that, Mr Sofronoff, that paragraph does not speak of unfairness, does it?

MR SOFRONOFF: His Honour states what was complained of and then does not use the term "unfairness".

TOOHEY J: No, but it is the "risk of interference with the proceedings", whatever that may mean.

MR SOFRONOFF: Yes. The reason I use the term "unfairness", your Honour, is that is the expression which emerges from Mr Justice Tadgell's reasons in Burrill. May I read that passage because - - -

TOOHEY J: It is just in order to get some idea of what the test is that you suggest is relevant here.

MR SOFRONOFF: The test that I suggest is relevant is that the court strived to ensure that there is an even-handed approach accorded to both parties, neither one getting an advantage over the other by some procedural means available only to one. Sentry is an example of where the use made of similar proceedings in the United States was held to give such an unfair advantage to one party in litigation. Burrill v Jolley is another example of it. The only reason I take your Honours to it is because the unfairness is articulated, whereas in the Sentry Case it was not. If I could read the passage from Mr Justice Tadgell's reasons at page 831 at line 15, his Honour said:

A more disturbing prospect - - -

BRENNAN CJ: We have a copy which seems to have been taken from probably some Internet or something of the sort.

MR SOFRONOFF: I am sorry, your Honour. May I read the passage?

BRENNAN CJ: Yes, read the passage.

MR SOFRONOFF: It is on the second-last page of the reasons, but in any event:

A more disturbing prospect is that the defendants may be able, putting it bluntly, to use the enquiry to have fed to them information, to their advantage in the litigation and to the corresponding disadvantage of the third party applicants. It is, as I would conceive it, part of the Court's function to ensure, so far as it can, that litigation before it is conducted without avoidable unfairness to one party or another in a particular cause.

It seems to me, in the circumstances of this case, that there might well be unwarrantable unfairness between the defendants on the one hand and the third party applicants on the other (whom the defendants or some of them have brought to this Court) by the unilateral use by the defendants, for the litigation, of information extracted during the enquiry from the third parties or persons or corporations associated with them.

Relief accordingly was granted.

KIRBY J: But this is not an inquiry, a roving commission; this is an arbitration that has been.....give a reference.

MR SOFRONOFF: That is so, your Honour.

KIRBY J: It is a very common procedure nowadays, becoming more common in all parts of our country, and what you are really saying is that that can be stopped. That really would be to the great disadvantage of the due administration of justice.

MR SOFRONOFF: I accept that in some circumstances it could have the effect that your Honour remarks upon. In this case the contractor is a party to both proceedings and could if it wishes join, it seems, all the common issues in one proceedings to which my clients are parties, or at least the company of which they are directors are parties, but instead elects to sue in other proceedings, in arbitral proceedings in New South Wales. So, while it is true that the proceedings in New South Wales are not an inquiry, nor in the Sentry Case were the impugned proceedings an inquiry. They were a piece of litigation with issues defined by the pleadings.

Your Honours, the special leave point that we wish to identify is this, that in the Full Federal Court decision there is reflected an acceptance of the proposition that this can constitute in an appropriate case an interference such that relief will be granted. In the decision of the Court of Appeal that proposition was rejected. Could I ask your Honours to look at the reasons of Justice Pincus at page 28 of the book, which is page 6 of his Honour's reasons. His Honour is dealing at the top of the page with Justice Lockhart's reasons in Sentry. Reading from the second line Justice Pincus said:

his Honour held that there was a real risk that the evidence to be given by the persons in question in Australia might touch issues in the Federal Court case. His Honour accepted that the proposed taking of depositions imposed a "real risk of interference with the Australian proceedings". It is not, I confess, absolutely clear to me what sort of interference his Honour thought was to be apprehended.

There is not to be derived from the Sentry Case, in my respectful opinion, any principle which assists the respondents here: it appears that the Federal Court merely attempted to apply to the matter before it statements of principle from.....("the BLF Case").

Your Honours, in our submission, this decision if it stands conflicts with the decision in the Sentry Case, with the consequence that in Queensland there is one authoritative decision which conflicts with a decision of the Federal Court which also carries authority, if not binding authority.

KIRBY J: But does it, or is it simply a different view about the unfairness of the particular case?

MR SOFRONOFF: There is little, in our submission, to differentiate between the circumstances in this case and the position in Sentry. In each case there were common parties and parties that were not in common. In each case the issues overlapped, but I do not think it can be suggested that they perfectly overlap. But the important central issue of the case was the same in each one. In each case it was considered that to require one party to disclose its hand at a very early stage, whereas the other party was not obliged to do that, constituted an unfairness.

KIRBY J: But there was a big difference. Sentry was a case involving a Wisconsin court, whereas these are two proceedings which at least originate in different courts of this country, in one of which there has been a reference to arbitration. So that it is simply the process of two courts dealing with issues that overlap, which must be a very common phenomenon at the moment in the nature of civil litigation, commercial litigation especially.

MR SOFRONOFF: Your Honour, one can imagine that in many cases there would be no unfairness because it would be open to one party or the other to join the proceedings together, yet in this particular case the New South Wales proceedings are arbitral proceedings and it would be difficult to know how my client could become a party to proceedings of that kind.

KIRBY J: The arbitral proceedings are conducted in private, I assume, are they?

MR SOFRONOFF: Yes.

KIRBY J: And no issue estoppel arises that would - - -

MR SOFRONOFF: No.

KIRBY J: So that you simply have the potential embarrassment of having some cross-examination in the arbitral proceedings but, except in criminal cases, that must often be the case: the nature of the multi-faceted business dealings that come before courts and arbitrations, references out to arbitrations.

MR SOFRONOFF: But with the added element we would point to here, that it is open to the contractor to proceed, we would submit, fairly in this jurisdiction in which my clients and the contractor, Thiess, are already parties and to join all the issues in the one proceeding, so that everybody plays by precisely the same rules.

BRENNAN CJ: But this argument in the Court of Appeal proceeded on the footing that it was a contempt of the court, is that right?

MR SOFRONOFF: It did, your Honour.

BRENNAN CJ: Do you seek to adhere to that?

MR SOFRONOFF: No, your Honour. We would wish to place it in the category of an abuse of - I am sorry, your Honour, I conceded too quickly.

KIRBY J: You would have to make that point - - -

MR SOFRONOFF: I would place it as high as that in that what it seeks to do is to interfere with the due administration of justice in the Queensland Supreme Court.

BRENNAN CJ: How?

MR SOFRONOFF: By causing a party to be placed in the position where it is obliged to give up an advantage that it possesses.

BRENNAN CJ: Why is that an abuse? If the party is liable to give evidence in other proceedings, how is that an abuse of the proceedings in the Supreme Court?

MR SOFRONOFF: It is an abuse in effect because the position of the plaintiff in the Queensland Supreme Court proceedings is that it is proceeding against that party already here but elects to conduct arbitral proceedings in another State, another jurisdiction.

BRENNAN CJ: I can well understand that on the ground of unfairness such as that which was referred to in the Burrill Case, a court might mould its orders to ensure that the minimal unfairness occurred or perhaps to eliminate the unfairness, but I do not see the slightest shred of contempt argument in this.

MR SOFRONOFF: Your Honour, it would be sufficient for our purposes to demonstrate that the principle that we seek to invoke is applicable here with the consequence that some form of injunctive relief would be available to the applicant.

TOOHEY J: Except that you then shift ground from a contempt of court approach to something that is described as interference or as unfairness.

MR SOFRONOFF: Yes, necessarily.

TOOHEY J: What, necessarily shift ground?

MR SOFRONOFF: Well, necessarily shift ground. If one points to an unfairness that in previous cases has invoked a principle recognised by the Full Federal Court with the consequence that injunctive relief has been granted, then, in our submission, that it does not constitute contempt is beside the point. If it also constitutes a form of interference with the process of the court that will justify relief being granted, then the court ought to grant relief.

BRENNAN CJ: Assuming that there is a jurisdiction to grant relief to eliminate unfairness, assuming that is the relevant principle, what is the nature of this case? Is it one in which that principle has been misapplied on the facts?

MR SOFRONOFF: Yes, in our submission.

BRENNAN CJ: Then what is the question of principle that has to be agitated?

MR SOFRONOFF: The question of principle is that not only has the principle been misapplied but, in the reasons of Justice Pincus in the passage to which I directed the Court's attention, it is suggested that there is no such principle that can be derived from the Sentry Case.

BRENNAN CJ: No, he says there is no principle of contempt. That was the conclusion to which.....was directed and which he resolved against at page 34.

MR SOFRONOFF: Yes, your Honour.

TOOHEY J: Could I just add that it is confirmed by what Justice McPherson says at page 20 where he isolates what he describes as:

the bare proposition that issuing and serving a subpoena on a witness to attend and testify in one set of proceedings involves, or may involve, a contempt of court if the same person is likely to be called to give evidence in other proceedings in the same or another court.

He says that proposition as a bare proposition is not supportable, though there may be particular instances in which it could fall foul of such a principle.

MR SOFRONOFF: Yes, your Honour. I accept that the case was conducted at first instance and on appeal on the footing that only contempt was in issue, but I would submit that at page 28 what is reflected in Justice Pincus's reasons is a rejection of a principle that an interference of the kind that has been identified gives rise to a claim for relief.

KIRBY J: Would you have had standing in the New South Wales proceedings, you not being a party to them, to seek a stay of those proceedings given on the basis of the greater convenience of having the proceedings all dealt with in Queensland?

MR SOFRONOFF: I do not know the answer to that, your Honour.

KIRBY J: That may be a more appropriate way conceptually to deal with this matter than to fashion a new ground of contempt.

MR SOFRONOFF: That is undoubtedly an approach that could be adopted, your Honour, but it would invoke precisely the same principle.

KIRBY J: Not quite.

MR SOFRONOFF: I am sorry, it would not invoke contempt but it would invoke the same principle in that what has to be identified is whether or not there has been an interference of a kind that will move the court to act.

KIRBY J: But that is based on convenience and the dispatch of all controversies, which is a provision in most Supreme Court Acts, certainly in the Supreme Court of New South Wales, and it is not based on extending a new notion of contempt, from which one shrinks a little.

MR SOFRONOFF: That is correct, your Honour. There is nothing I wish to add, your Honours.

KIRBY J: In saying that I am not necessarily encouraging such an application or predicting that it would succeed.

MR SOFRONOFF: No. Thank you, your Honours.

BRENNAN CJ: We need not trouble you, Mr Keane.

MR KEANE: If the Court pleases.

BRENNAN CJ: The Court need not trouble you, Mr Keane.

This case has proceeded on the footing that the applicant's case was that the issue of the subpoenas was a contempt of court. The Court of Appeal was right to reject that case. The applicant now seeks a similar remedy on the ground of unfairness. So stated, the case is merely one of fact and does not warrant a grant of special leave. For those reasons, special leave will be refused.

MR KEANE: We ask for costs, your Honours.

BRENNAN CJ: Have you anything to say about that, Mr Sofronoff?

MR SOFRONOFF: No, your Honour.

BRENNAN CJ: Special leave will be refused with costs.

AT 10.36 AM THE MATTER WAS CONCLUDED