New South Wales Supreme Court CITATION : SHARON Y EUBANKS FOR THE UNITED STATES OF AMERICA v NICHOLAS BASIL CANNAR AND BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED [2003] NSWSC 1267 HEARING DATE(S) : 7/11/03 JUDGMENT DATE : 19 December 2003 JUDGMENT OF : Bell J at 1 DECISION : See paragraph 52 of judgment Evidence Act 1995 LEGISLATION CITED : Evidence On Commission Act 1995 Supreme Court Act 1970 Supreme Court Rules 1970 Lenning v Alexander Proudfoot Company World Headquarters (unreported) NSW CA 22 April 1991 Magnusson v ACT Health & Community Care Service [2001] ACTSC 3 CASES CITED : Re Western Canada Oil, Lands and Works Company (1877) 6 Ch D 109 Scott v Scott [1913] AC 417 United States of America v Phillip Morris [2003] All ER (191) DEC SHARON Y EUBANKS FOR THE UNITED STATES OF AMERICA - (Respondent) PARTIES : NICHOLAS BASIL CANNAR - (Applicant) BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED FILE NUMBER(S) : SC 13177/02 Dr Bell (Respondent - Ms Eubanks) COUNSEL : Mr Gageler SC / Mr Speakman / Ms Richardson (Applicant - Mr Cannar) Mr S Finch SC (Batco) Ebsworth & Ebsworth (Respondent - Ms Eubanks) SOLICITORS : Gilbert & Tobin (Applicant - Mr Cannar) Baker & McKenzie (Batco) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BELL J Friday 19 December 2003 13177/02 SHARON Y EUBANKS FOR THE UNITED STATES OF AMERICA v NICHOLAS BASIL CANNAR AND BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED JUDGMENT 1 BELL J: On 8 October 2003 I dismissed paragraph 1 of the applicant Nicholas Basil Cannar's amended notice of motion by which he claimed an order that the orders made by James J on 9 December 2002 be set aside. I stood over the balance of the applicant's motion to a date to be fixed. I also stood over the motion filed by British American Tobacco (Investments) Limited (BATCo) on 19 February 2003 to a date to be fixed. 2 Both motions came before me for directions on 7 November 2003. On that occasion a timetable was fixed for the exchange of written submissions and I gave leave to the applicant to file a further amended motion. 3 The applicant moved on his further amended motion on 16 December 2003. The applicant claims orders varying the orders made by James J in eight respects. The first proposed amendment was not controversial. James J ordered that the applicant be examined before Mr Morton Rolfe QC. The applicant invites the court to vary that order by providing that the examination be conducted before a Judge of this Court. 4 James J's orders were made pursuant to section 33 of the Evidence On Commission Act 1995 (the Act). Part 58 of the Supreme Court Rules 1970 (the SCR) makes provision with respect to the taking of evidence for foreign courts. Part 58 Rule 2 provides that Pt 27 rr 3 to 11 apply to the conduct of examinations for foreign courts. 5 The court may make orders for the examination of a person before a Judge of the Court or such other person as may be appointed: Pt 58 r 2 and Pt 27 r 1A. 6 Part 27 Rule 1C(1) of the SCR provides that a judge may not act as an examiner otherwise than with the concurrence of the Chief Justice. 7 The reasons advanced in support of the proposed variation are based on considerations of efficiency in light of the likely conduct of the examination. The applicant submits that it is probable that his former employers will object to evidence being adduced from him with respect to a number of matters on the ground of client legal privilege. Both BATCo and British American Tobacco Australia Services Limited (BATAS) are expected to appear at the examination for the purpose of taking objections on this basis. 8 Given the allegations made by the United States Department of Justice (the DOJ) in the United States' proceedings it is further submitted that questions of the applicant's privilege against self-incrimination, both under the law of Australia and under the law of the United States and the United Kingdom may arise. 9 Section 34(1) of the Act provides "a person must not be compelled by virtue of an order under section 33 to give any evidence which the person could not be compelled to give; (a) in similar proceedings in the State". The mechanism for resolving objections taken pursuant to s 34(1)(a) of the Act at an examination conducted before an examiner who is not a judge is as provided by Pt 27 r 7. Where the objection is taken it is to be determined by a Judge of this Court upon notice of motion. 10 The respondent does not object to the appointment of a judge as an examiner. In my view it is appropriate to so order. The probability of a number of objections being taken pursuant to s 34(1)(a) of the Act is high. In the event that the examination proceeds before an examiner who is not a Judge of this Court, it is likely to be interrupted on a number of occasions by the need to have rulings made by a Judge on claims of privilege. The conduct of the examination would be drawn out over a lengthy period. I am mindful that the trial of the US proceedings is fixed to commence in September 2004. 11 The applicant claimed orders in paragraph 1(a) of his further amended motion placing time limits on the examination. Mr Gageler SC, who with Mr Speakman and Ms Richardson appeared on the applicant's behalf, did not press this aspect of the motion in the event that the order was varied to provide for the examination to be conducted before a Judge. It is not necessary for me to deal further with paragraph 1(a) of the motion. 12 The second variation of the orders made by James J that the applicant seeks is that the examination be conducted in camera. This variation is opposed by the respondent. The applicant relies on the provisions of Pt 27 r 5(1). In his submission, consistent with the commentary in Richie's Supreme Court Procedure NSW, at [27.5.1], implicit in the terms of r 5(1) is that the examination will be held in private. 13 It is appropriate to set out the terms of Part 27 Rule 5(1), (1A) and (3): "Conduct of examination 5(1) The examiner shall permit each party, his counsel and solicitor to attend the examination. (1A) Subject to this Part, the proceedings before the examiner shall be in accordance with the procedure of this Court. … (3) The examination, cross-examination and re-examination of a person before an examiner shall, unless the Court otherwise orders, be conducted in the like manner as at a trial." 14 In addition to the cases cited in the Practice, Mr Gageler referred me to the decision of Master Connelly in Magnusson v ACT Health & Community Care Service [2001] ACTSC 3. The proceedings in that case involved a claim for damages for personal injuries. An application was made that the plaintiff's evidence be taken otherwise than at trial pursuant to the provisions of the Rules of the Supreme Court of the Australian Capital Territory. Master Connelly noted that the applicable rule was equivalent to the provisions of Pt 27 r 5(1) of the SCR. His Honour observed at paragraph [6]: "[6] The proposition that the process of taking the deposition of a witness by an examiner is not done as in open court is consistent with the structure and purpose of the rule. The process of taking the deposition is not the tendering of the evidence in the case. After the deposition is taken, and recorded (in any of the various ways set out in O39 r18), a transcript is prepared (O39 r19 (2) which must be certified as being correct by the transcriber, and then the examiner will endorse the transcript (O39 r19 (3). The original of the deposition and any transcript is then to be sent to the Registrar (O39 r19(4). [7] This will then, in the normal course, be tendered in the trial, and at that point it becomes evidence. It does not necessarily follow that this will happen, however, and it is stated in Phipson that, 'The party who takes the evidence before the trial is not bound to put that evidence in at the trial but he or any other party may do so, in which case the whole deposition becomes evidence" (Phipson on Evidence, 14th ed, 1990, 10.06).'" 15 I was also referred to the decision of Jessel MR in Re Western Canada Oil, Lands and Works Company (1877) 6 Ch D 109. In that case a summons was issued by the official liquidator under the provisions of the Companies Act for the examination of certain members of a firm. The examiner declined to exclude a person whom the official liquidator was considering calling to be examined in the proceedings from the examination room. The official liquidator declined to proceed further with the examination and brought a motion claiming orders that the person be excluded. Jessel MR observed at 110-111: "The place where the examiner sits is not a public Court, but a mere office. That was so before the Judicature Acts, and those Acts, so far as I know, have made no change in his position, and his office remains a private office to this day. The 31st section of the Act 15 & 16 Vict. c. 86, which is still in force for this purpose, provides that 'all witnesses to be examined orally under the provisions of this Act shall be so examined by or before one of the examiners of the Court, or by or before an examiner to be specially appointed by the Court, … and such examination shall take place in the presence of the parties, their counsel, solicitors, or agents'. That must mean in the presence of the parties, their counsel, solicitors, or agents exclusively. It cannot mean that the parties, their counsel, solicitors, or agents must be present. It can only mean that the examination shall take place in their presence if they choose to attend. Subject to this, it is a private examination." 16 The respondent contends that the provisions of Pt 27 r 5(1) should not be read as providing for the conduct of examinations in camera. In this respect the respondent pointed to the provisions of Pt 27 r 5(1A) and (3) and to the provisions of s 80 of the Supreme Court Act 1970 (the SCA). 17 In the respondent's submission, by requiring that proceedings before the examiner be conducted in accordance with the procedure of the court, the SCR contemplate that the examination shall be conducted in public, subject to the discretionary exception in a case where "the paramount object of securing that justice is done would be really rendered doubtful of attainment" by insistence on a public hearing: Scott v Scott [1913] AC 417 at 439. 18 The respondent noted the observations of Spigelman CJ in a speech delivered at the 31st Australian Legal Convention: "Seen to be done: The principle of open justice", 74 ALJ 290 and 378. 19 Generally it is the respondent's submission that the applicant has failed to demonstrate any cogent reason that circumstances exist justifying the exclusion of the public from the examination so as to displace the general rule requiring that proceedings be held in public. 20 The respondent submitted that the reasons favouring the conduct of an examination being held in public were strengthened in the case of an examination conducted by a Judge of this Court. I am not persuaded that this is the case. Part 27 r 5(1) refers to "the examiner". The reference is to an examiner being a Judge of this Court or being a person appointed who is not a Judge of this Court. When the SCR seek to distinguish between examinations conducted before a judge and those conducted before a person not being a judge, they are explicit: Pt 27 r 7(2). 21 The respondent sought to distinguish Magnusson on the basis that it was a case concerning the taking of a deposition of a witness and Re Western Canada Oil, Lands and Works Company on the basis that the examination was one provided for by the Companies Act. It was said that Jessel MR was not concerned with rules of procedure equivalent to those in Pt 27 r 5 of the SCR. 22 I am not persuaded that the provisions of Pt 27 r 5(1A) and (3) support the construction for which the respondent contends. In this respect I note the commentary and the cases therein cited in Richie's Supreme Court Procedure at [27.5.1]. It does not seem to me that the principles of open justice that the respondent calls in aid have application to an examination pursuant to an order made under s 33 of the Act. The evidence of the applicant is to be taken and the record of it transmitted to the United States District Court for the District of Columbia. It may be that the record of the examination will be tendered in the US proceedings. In the event that it is tendered at the trial and admitted it will become public as evidence in those proceedings. 23 The proceedings before this Court are those by which the plaintiff claims the examination order. The public has an interest in these proceedings and in knowing how it is that this Court deals with a request for judicial assistance from a foreign court. I am not persuaded that the public of New South Wales has an interest in the examination of the applicant in respect of proceedings in the US District Court prior to the answers that he gives to questions that may be asked of him becoming evidence in those proceedings. While the proceedings in Re Western Canada Oil, Lands and Works were of a different character to the present, it is to be noted that the legislation with which Jessel MR was concerned was in terms that bear some similarity to the terms of Pt 27 r 5(1) of the SCR. I consider that the appropriate course is to vary the orders made by James J so as to provide for the hearing of the examination to be held in camera. 24 The applicant next seeks to vary the orders to make provision for him to be provided in advance of the examination with the questions that will be put to him in writing together with copies of the documents upon which the DOJ proposes to examine him. As I have noted, the SCR contemplate that the proceedings shall be conducted in accordance with the procedure of the Court. It is not the procedure of the Court for a witness to be provided in advance of being called to give evidence with a statement in writing of the questions that are to be put to him nor is it the usual procedure of the court for a witness to be supplied with a copy of the documents upon which he is to be examined. 25 Mr Gageler pressed both variations upon the basis of efficiency. He noted that it was proposed to examine the applicant concerning events over a lengthy time span and that in all probability he would be referred to documents that may be the subject of a claim of privilege. It was submitted that the examination would be conducted in a more economical way if those advising him were able to formulate privilege objections in advance. Equally, if the applicant had the questions that he was to be asked supplied to him in writing, he could better prepare himself for the examination. In this respect my attention was drawn to the judgment of Moore-Bick J in United States of America v Phillip Morris [2003] All ER (191) DEC at paragraph 67. It is to be noted that Mr Gageler did not press the application upon the basis of oppression but rather upon the considerations of efficiency to which I have referred. In this respect he noted that in commercial litigation it is commonplace that a tender bundle is prepared in advance. The applicant is a witness in the proceedings and not a party. 26 I am not persuaded having regard to the provisions of Pt 27 r 5(1A) that it is appropriate to vary the orders so as to require the provision of a written statement of the questions to be asked of the applicant or so as to provide that he be furnished with a copy of the documents upon which it is proposed to examine him and I decline to do so. 27 The next matter that the applicant seeks by way of variation of the orders made by James J is the deletion of those parts of his Honour's orders that require that the examination be video-taped. 28 Part 27 Rule 8A provides: "The Court or the examiner may give directions for making, by any audiovisual, method a recording of proceedings on an examination." 29 The applicant submits that the taking of a video recording of the examination would be inconsistent with the mechanism for claiming privilege provided by Pt 58 r 6. In written submissions the applicant contended: "If a video were to be taken of the examination it would run afoul of the privilege-claiming procedure in Part 58 Rule 6. This is because a video of the examination would be a single 'document' of the examination — containing all testimony of the examinee, whether compelled over objection or not." 30 The provisions of Pt 58 r 6 govern the procedure to be adopted in a case in which an examinee invokes privilege pursuant to s 34(1)(b) of the Act. The examinee may be compelled to give evidence over objection. The evidence must be contained in a document separate from the remainder of the deposition of the witness: Pt 58 r 6(3)(a) of the SCR. 31 I see no reason why a video recording of the examination may not be edited so as to exclude from the recording that is transmitted to the foreign court evidence given over objection pursuant to the provision of Pt 58 r 6 of the SCR. It is common for electronically recorded interviews with suspected persons to be edited so as to exclude inadmissible material. 32 The principal reason for seeking to delete the requirement that the examination be video-recorded is the applicant's concern that the recording might end up in the hands of the media either in the United States or in Australia. The applicant accepts that the undertaking given by the DOJ through its counsel in relation to the use of his testimony limits the use of any video recording prior to its use in the US proceedings. However, the undertaking ceases to have effect when the video recording is tendered in the US proceedings. 33 The respondent opposes the variation of the order and in this respect. She directs attention to the terms of Judge Kessler's request, namely, that the applicant's testimony "be committed to writing and be video-taped". Her Honour's ability to make an assessment of the applicant's demeanour could only be exercised if she has the benefit of a video recording of the examination. In the respondent's submission, considerations of comity weigh strongly in favour of acceding to Judge Kessler's request, particularly given that the SCR makes provision for the audiovisual recording of an examination. 34 To my mind, the consideration that the trial judge should have the benefit of a video recording of the applicant's evidence is a powerful one that mitigates against varying the orders in the manner that the applicant seeks. I am mindful of the applicant's concerns that the video recording, if tendered as an exhibit in the US proceedings, may become available to the media. 35 While I propose to structure the orders that I make so as to keep both the transcript of the examination and any video recording of it confidential prior to its tender at the trial, no order that I make will have effect with respect to the use to be made of it in the event that it is tendered in the US proceedings. 36 I note that proceedings in this jurisdiction are not televised and that even in cases of great public interest, witnesses are not exposed to video images of their evidence being broadcast on television. It may be that the US District Court is able to take this consideration into account in determining the use to be made of the video recording of the applicant's evidence. That is a matter for Judge Kessler. I am not persuaded that the applicant's concern is of sufficient weight to favour the deletion of the requirement that the examination be video-taped and I decline to so vary the orders earlier made in this respect. 37 The applicant seeks an order that the plaintiff keep the transcript of the examination confidential and not make any use of the transcript other than to tender it at trial. In written submissions the respondent noted that she is agreeable to consenting to an order that gives effect to the terms of her undertaking given in a letter dated 22 April 2003 that is annexure C to the affidavit of Anthony John Highfield sworn on 23 April 2003. In that letter she states: "As you are aware, on behalf of the United States I undertake to the New South Wales Supreme Court that until the transcript of testimony to be given by Mr Cannar at the forthcoming examination commencing on June 4, 2003 (including any videotape recording of such testimony) is tendered into evidence at the trial in the US proceedings commencing on September 13, 2004, the United States will not use the testimony other than for the purposes of the US proceedings (such purposes including any pre-trial motions and submissions that the United States may make in connection with the US proceedings, I understand that Australian convention refers to such motions and filings as 'interlocutory') unless the United States is compelled to produce or disclose the testimony to another person under the compulsion of law or as directed by the US District Court or any other court of competent jurisdiction." 38 Evidence led on the applicant's behalf on the hearing of paragraph 1 of his motion included the report of Loren Kieve that "once a document is filed in the court record it is generally considered to be a matter of public record" (second report paragraph 3). The transcript of the applicant's evidence (and any videotape recording of it) might thus become public prior to the admission of the evidence at trial were I to frame an order in the terms of the plaintiff's undertaking. I consider that it is appropriate to vary the orders made by James J so as to structure an order in terms that the plaintiff keep the transcript of the examination and any video recording of the examination confidential and not make any use of it other than to tender it at trial. 39 The final matter that the applicant seeks is that leave be granted to him to be represented at the examination by legal practitioners of this Court and legal practitioners of the United States of America. The making of such an order varying the orders of James J was not opposed. I consider it a reasonable application and propose to vary the orders accordingly. 40 Before making the orders it is appropriate to turn to the motion filed by BATCo. BATCo claims orders including that it, its counsel and solicitors, including US counsel if so instructed, have leave to appear at any examination of Mr Nicholas Cannar conducted pursuant to the letter of request. BATCo is a party to the US proceedings. 41 The order that is sought is an appropriate one. It was not opposed by the respondent. I propose to make it. 42 BATCo seeks an order in paragraph two of its motion that in any examination of Mr Cannar pursuant to the letter of request the plaintiff's questioning be limited to examination-in-chief and re-examination (if any). 43 In paragraph 3 of its motion BATCo seeks an order that a certified copy of the transcript and videotape and any examination of Mr Cannar pursuant to the letter of request be provided to its solicitors by no later than one month after the date of the examination. 44 In support of the order sought in paragraph 2 of its motion, in written submissions BATCo drew attention to the provisions of Pt 27 r 5(1A), (2) and (3) of the SCR to which I have already referred. 45 BATCo notes that the procedure of this Court at trial is that a party calling a witness examines him or her in chief and that other parties may then cross-examine him or her and that the party calling the witness may re-examine him or her on matters arising in cross-examination. BATCo observed that the Applicant is the Plaintiff's witness and that his name appears on the list of witnesses for trial in the US proceedings. BATCo drew attention to the form of orders upon which the parties were agreed in Lenning v Alexander Proudfoot Company World Headquarters (unreported) NSW CA 22 April 1991. The Respondent opposed the making of orders in these terms in advance of the examination on issue. 46 The examination will be conducted before a Judge of this Court. I see no utility in making the orders in the terms set out in paragraph 2 of BATCo's motion as drafted. There has been some issue as to whether such an order would operate to the prejudice of any right that the Respondent may have under s 38 of the Evidence Act (in the event that the provisions of the Evidence Act are applicable to the taking of the evidence of the Applicant at the examination). The conduct of the examination is a matter for the judge who will be appointed as an examiner. It shall be in conformity with the provisions of pt 27 r 5(3) unless the Court otherwise orders. I see no reason to otherwise order. 47 I turn now to a number of questions concerning costs. With respect to paragraph 1 of the Applicant's amended motion that was determined by my judgment of 8 October 2003, there is no reason why costs should not follow the event. 48 With respect to the Applicant's Amended Motion filed pursuant to the leave granted by me on 7 November 2003, I consider that each party has enjoyed a measure of success. Subject to anything that the parties wish to put to me, I consider it appropriate that each party bear his or her own costs. 49 BATCo invited me to approach the question of the costs of its objections to the tender of exhibits 3 to 7 to the Letter of Request and the Foyle Memorandum upon the basis that it had been successful on five of the six issues raised by the Plaintiff and determined in connection with its privilege claim. In this respect, it was contended that only a small proportion of the hearing time taken up by its privilege objections had been occupied in argument upon the one issue on which the Court found against it. The evidence prepared and relied upon by the Respondent in opposition to BATCo's privilege objections was said to have gone largely to issues upon which she had been unsuccessful. 50 Part 52 r 11 of the SCR provides that if the Court makes any order as to costs, it shall subject to Pt 52, order that the costs follow the event except where it appears that some other order should be made as to a whole or any part of the costs. The Respondent has invited me to have regard to the practical result of the claim made by BATCo. BATCo was unsuccessful in its claim with respect to exhibits 3 to 7 of the letter of request. BATCO's success was limited to the claim advanced in respect of the Foyle Memorandum. This occupied notably little of the time taken up by the privilege argument. 51 I do not consider that this is an appropriate case in which to order that the costs of the privilege claim should be apportioned by consideration of the discrete issues that were argued in support of it. 52 The Plaintiff seeks an order that BATCo pay her costs on an indemnity basis with respect to that part of the hearing on 4, 5, 6 and 10 June 2003 taken up with a consideration of the privilege claim. I do not see the occasion for making an order on an indemnity basis and I decline to do so. (Leave granted to Miss Richardson to file in Court further amended notice of motion.) Orders: 1. The Orders made by James J on 9 December 2002 (the Orders) are varied so as to delete the words "Attend the offices of the National Dispute Centre, level 1, Selborne Chambers, 174 Phillip Street Sydney, 2000 continuing thereafter at such place and time as the examiner may direct from day to day until complete" and replace those words with the words, "Attend the Supreme Court of New South Wales continuing thereafter at such place and time as the examiner may direct from day to day until complete." 2. Order 2 of the Orders is varied so that the words, "Mr Morton Rolfe QC of 233 Macquarie Street", are deleted and replaced with the words, "A judge of the Supreme Court". 3. Order 4 of the Orders is varied so as to include: Order 4(A), that the examination of Nicholas Cannar be conducted in camera. Order 4(B), leave be granted to Nicholas Cannar to be represented at the examination by legal practitioners of the Supreme Court of New South Wales and legal practitioners of the United States of America. Order 4(C), leave be granted to British American Tobacco (Investments) Limited to be represented at the examination by legal practitioners of the Supreme Court of New South Wales and legal practitioners of the United States of America. 4. Order 5 of the Orders is varied so as to include Order 5(A), the plaintiff to keep the transcript of the examination and any video recording of the examination confidential and not make any use of the transcript or any video recording of the evidence of Nicholas Cannar other than to tender the same at trial. Order 5(B), a certified copy of the transcript and any video recording of the examination of Nicholas Cannar pursuant to the letter of request be provided to the solicitors for British American Tobacco (Investments) Limited by no later than one month after the date of the examination upon the solicitors undertaking to keep the transcript of the examination and any video recording of the examination confidential and not to make any use of the transcript or any video recording of the evidence of Nicholas Cannar until the same is tendered at the trial. 5. The Applicant, Nicholas Cannar, is to pay the Respondent's costs of and incidental to the hearing of the relief claimed in paragraph 1 of his Amended Notice of Motion filed on 4 June 2003. 6. Each party is to bear its own costs with respect to the applicant, Nicholas Cannar's Further Amended Motion filed pursuant to leave granted by me on 7 November 2003. 7. BATCo is to pay the plaintiff's costs of and incidental to the objections taken by it upon the grounds of client legal privilege on the hearing of the Amended Motion brought by Nicholas Cannar. 8. BATCo is to pay the Respondent's costs of its motion filed on 19 February 2003. ********** Last Modified: 03/19/2004 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.