CATCHWORDS
EVIDENCE - admissibility of hearsay evidence - motion for permanent injunction restraining taking of oral deposition pursuant to 28 USC § 1782 in Colorado pursuant to order of United States District Court of potential witness in these (Federal Court) proceedings - whether hearing final or interlocutory - test - ruling on evidence.
Evidence Act 1995 (Cth), s 75.
Federal Court Rules O 1, r 4; O 20, r 2; O 33, r 2.
Australian Law Reform Commission's Report No 38 "Evidence" (ALRC 38) para 143, p 79, fn (33).
Ex parte Bucknell (1936) 56 CLR 221.
Ex parte Britt [1987] 1 Qd R 221.
Hall v Nominal Defendant (1966) 117 CLR 423.
ALLSTATE LIFE INSURANCE CO & ORS v ANZ BANKING GROUP LTD & ORS (No 28)
Nos NG 523, 622 and 635 of 1991 and NG 381 of 1994.
Lindgren J
Sydney
16 February 1996
IN THE FEDERAL COURT OF AUSTRALIA)
NEW SOUTH WALES DISTRICT REGISTRY)
GENERAL DIVISION )
No NG 381 of 1994
BETWEEN:
ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
Applicants
AND:
AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
Respondents
No NG 523 of 1991
BETWEEN:
ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
Applicants
AND:
AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
Respondents
No NG 622 of 1991
BETWEEN:
ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
Applicants
AND:
AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
Respondents
No NG 635 of 1991
BETWEEN:
ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
Applicants
AND:
AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
Respondents
CORAM: Lindgren J
PLACE: Sydney
DATE: 16 February 1996
REASONS FOR JUDGMENT (No 28)
(Ruling in relation to hearsay evidence - final or
interlocutory hearing)
INTRODUCTION
This is a resumption of the hearing begun yesterday of a motion by
Skadden, Arps, Slate, Meagher, & Flom ("Skadden") brought by
notice of motion filed on 1 February 1996.
Skadden seeks an order restraining the applicants from taking or causing
to be taken, or participating in the taking of, an oral deposition from Millard
Zimet in Denver, Colorado. The oral
deposition would be taken pursuant to an order permitting discovery made by the
United States District Court for the
District of Colorado in Miscellaneous Case No 96/29 pursuant to 28 USC §
1782. That order was made on an ex parte
application to that Court by 14 of the 17 applicants. Of the 17 applicants, 16 are holders of
debentures issued by Linter Textiles Corporation Limited ("Linter
Textiles") with which the proceedings are concerned and the remaining
applicant is a trustee for debenture holders.
Of the 16 debenture holders, the 14 which applied for the order are
represented by the same New York firm of attorneys, Kasowitz, Benson, Torres
& Friedman, L.L.P.
Mr Michael C Harwood, a member of that firm, who had represented the 14 applicants on their application for the order permitting oral discovery and made the affidavit in support of it. Yesterday, in the course of the hearing, and in particular in the course of the taking of his evidence by video from New York, questions arose as to the admissibility of certain passages of Mr Harwood's affidavit. The affidavit was being read in opposition to Skadden's motion. I gave rulings that the passages were admissible subject to objections by Skadden that the passages were hearsay and were not relevant. I will say more about the circumstances of the giving of the rulings shortly.
Following the hearing yesterday, in the latter part of the day and after
Mr Harwood's evidence by video was concluded, more extensive submissions were
made on the question of the
admissibility of the passages of the affidavit.
It is as a result of the making of those submissions that the present
final ruling is given.
BACKGROUND
Skadden's notice of motion seeks in paras 3 and 4 the following relief:
"3. The Applicants be restrained from taking or causing to be taken or participating in the taking of any oral deposition from Millard Zimet pursuant to the order dated 24 January 1996 made by the United States District Court for the District of Colorado permitting discovery pursuant to 28 USC § 1782 in Miscellaneous Case No. 96 x 29.
4. Further or in the alternative, the Applicants be restrained until further order in terms of Order 3."
It will be noted from the structure of paras 3 and 4 that para 4 is expressed as an interlocutory order and para 3 is expressed as a final order. The motion in relation to para 4 was before the Court on 5 February 1996, when I made the following order at the conclusion of the hearing (see Reasons for Judgment (No 24):
"On the motion of the first cross respondent ('Skadden') filed 1 February 1996 (doc #831) seeking to restrain the applicants from taking any deposition of M Zimet;
(a) note the usual undertaking as to damages
given to the Court by Skadden through its counsel;
(b) upon that undertaking order that the applicants be restrained until further order from taking or causing to be taken or participating in the taking of any oral deposition from Millard Zimet pursuant to the order dated 24 January 1996 made by the United States District Court for the District of Colorado permitting discovery pursuant to 28 USA §1782 in Miscellaneous Case No 96 X 29;
(c) direct Skadden (applicant on the motion) to file and serve any further evidence in support of the motion by 9 February 1996;
(d) direct the applicants (respondents to the motion) to file and serve any further evidence by 12.00 noon on 13 February 1996;
(e) direct Skadden to file and serve any evidence in reply by 4.00 pm on 14 February 1996;
(f) Stand over the remainder of Skadden's motion for hearing to 9.30 am on 15 February 1996;
(g) grant liberty to apply generally to the parties on 3 hours' notice; and
(h) reserve generally the question of costs and, in particular, the question of costs of the video link-up."
In the course of the hearing on 5 February of Skadden's motion in so far as it related to para 4, Mr Douglas QC, who then appeared for the applicants as respondents, referred to the fact that certain evidence would be relied upon as showing that the bringing of the motion was an abuse by Skadden of the process of this Court (transcript p 7). On the hearing yesterday, which was directed to para 3 of the notice of motion, the affidavit evidence of Mr Harwood to which I referred was sought to be read as being relevant to that issue.
Shortly, it was evidence directed to showing that a Mr Schwarz of Skadden had attempted to bring about a situation in which two expert witnesses or potential expert witnesses for the applicants might reconsider whether they would provide affidavit evidence for the applicants, either at all or to a particular effect proposed. Those two witnesses were a Mr Rennie of Ernst & Young and a former United States judge, Bernard Meyer, now a partner in the New York law firm, Meyer, Suozzi, English & Klein, PC.
Evidence was not read yesterday from anyone with whom Mr Schwarz had spoken. Mr Harwood's affidavit gave an account of what he had been told by others as to the alleged approaches by Mr Schwarz. In so far as the evidence was relied on to prove the making of the approaches by Mr Schwarz, Mr Harwood's evidence was clearly hearsay.
On the question of the admissibility of the passages from Mr Harwood's affidavit, there was debate as to whether the hearing was interlocutory or final. The difficulty which existed in dealing with that question appropriately yesterday was that the debate took place in the course of the examination of Mr Harwood by video from New York. That led to my giving the rulings referred to earlier pending the making and consideration of more ample submissions. It was understood that depending on the final rulings to be given, it might be necessary for Mr Harwood to be cross examined further.
REASONING
The nature of the proceedings is to be determined not by the form of them, for example, by the fact that they are brought by notice of motion in existing proceedings, but by reference to the kind of relief sought: Ex parte Bucknell (1936) 56 CLR 221 at 225; Ex parte Britt [1987] 1 Qd R 221 (McPherson J) at 223-224. The relief sought here is an injunction restraining the applicants from exercising a right given to them pursuant to foreign law, namely 28 USC § 1782.
The distinction between final and interlocutory proceedings and orders has been much discussed, often in the context of the question whether an appeal lies as of right or only with leave. In Hall v Nominal Defendant (1966) 117 CLR 423 at 444, Windeyer J, after referring to authorities, said that:
"a final order is one which finally disposes (subject only to appeal) of an action or an existing dispute between the parties."
Although the formula by which the distinction is expressed might be agreed, there may be difficulty in applying it. In one sense, even a decision which all would acknowledge to be interlocutory, finally disposes of the particular issue the subject of that decision, subject to any right of appeal. For example, a decision that particular documents must or need not be discovered is an interlocutory order. Yet it finally disposes of the particular dispute between the parties over discovery, subject to any appeal brought with leave.
Sometimes interlocutory orders have been referred to as orders which preserve the status quo pending a final hearing and determination. But again that is only a commonly encountered class of interlocutory order. An order resolving a dispute over discovery or interrogatories, for example, although clearly interlocutory, is not of that kind.
Common to the two kinds of interlocutory order just referred to is the fact that they contemplate that the parties will be before the same court again when a decision will be made which will determine the parties' jural relations after which they will not be before that court again on the same matter.
In the present case, what is sought is an injunction permanently restraining the exercise of a right to depose a potential witness apparently given to the applicants pursuant to a United States statute. It may be that if the right was given by this Court's Act or Rules as an incident of the procedures governing the present proceeding it would be proper to regard an order resolving a dispute over the exercise of the right as interlocutory. But the right here in question, although given by United States law for the purpose of assisting foreign or international tribunals and "any interested person" (see 28 USC § 1782 quoted in Reasons for Judgment (No 24)), is not an incidental part or adjunct of these proceedings and is independent and self standing.
For the foregoing reasons, I have come to the view that the order sought, namely an injunction permanently restraining the applicants from taking the oral deposition of Mr Zimet in exercise of a right apparently given to them under United States law, is in the nature of a final order.
Mr Emmett QC has submitted on behalf of the applicants that a basis on which the hearsay evidence of Mr Harwood should be received is that what I am dealing with is an application for dismissal of Skadden's motion as an abuse of process. Order 20 r 2 (1) (c) provides that:
"Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding -
(a) ..........................................
(b) ..........................................
(c) the proceeding is an abuse of the process of the Court,
the Court may order that the proceeding by stayed or dismissed generally or in relation to any claim for relief in the proceeding."
Order 20, within which that provision occurs, is headed "Summary Disposal and Stay of Proceedings."
The rule contemplates that the proceeding will be stayed or dismissed in limine. This, I think, is made clear by O 20 r 5 which provides that:
"A party applying for an order that a proceeding be stayed or dismissed ... shall make the application by motion upon notice."
While Mr Douglas QC foreshadowed that abuse of process would be raised, it is clear to me that I am not hearing an application for summary dismissal on that ground. There is before the Court no motion for summary dismissal. At the beginning of the hearing yesterday, Mr Sullivan QC for Skadden said this:
"Your Honour adjourned Skadden Arps [sic] notice of motion dated 1 February 1996 to today for hearing on a final basis and we now seek the orders set forth in that notice of motion and in particular, order 3 on a final basis." (emphasis supplied)
The hearing of the evidence was then embarked upon generally in relation to para 3 of Skadden's notice of motion.
The matter of the use of hearsay evidence is referred to in O 33 r 2 of the Federal Court Rules. That rule empowers a judge to admit hearsay evidence in certain circumstances but not "as evidence on an issue at a trial". The expression "trial" is defined in O 1 r 4 as "any hearing other than an interlocutory hearing". The expression "interlocutory hearing" is not defined. I regard myself as engaged in a trial of the issue raised by para 3 of Skadden's notice of motion.
I should refer to s 75 of the Evidence Act 1995 (Cth). This provides as follows:
"In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source."
There is no definition of "interlocutory proceeding" in that Act. However, "interlocutory proceedings" are referred to in the Law Reform Commission's Report No 38 "Evidence" (ALRC 38) which preceded the passing of the Act, as
" ... proceedings that are not final, usually dealing with procedural problems that arise in preparing a case for trial, but including proceedings for injunctions pending the trial of an action." (para 143, p 79, fn (33))
The express reference to "proceedings for an injunction pending the trial of an action" suggests that a proceeding for a permanent injunction was not intended to be regarded as an interlocutory proceeding. In any event, in my view it is not.
There is another matter. Summary dismissal may be ordered only with exceptional caution and where it is clear that there is no real question to be tried (it is unnecessary to cite authorities for this commonplace proposition). It suffices to say that in my view, in this context I cannot conceive of a case in which contested hearsay evidence could establish the ground referred to in O 22 r 2 (1) (c), that is to say, make it appear to the Court that the proceeding is an abuse of the process of the Court.
CONCLUSION
Skadden's motion, in so far as it seeks the order referred to in para 3, seeks final relief and hearsay evidence is not admissible on the present hearing.
I will now, in the light of that ruling, give rulings on the admissibility of the particular passages in Mr Harwood's affidavit which were conditionally admitted into evidence yesterday.
[There followed rulings against the admissibility of the relevant hearsay passages in Mr Harwood's affidavit.]
I certify that this and the preceding 11 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.
Associate:
Dated: 23 February 1996
Heard: 15, 16 February 1996
Place: Sydney
Decision: 16 February 1996
Appearances: Mr A J Sullivan QC with Mr S Gageler and Dr A Bell of counsel instructed by Dibbs Crowther & Osborne appeared for Skadden (as applicant on the motion).
Mr A R Emmett QC with Mr D Stack of counsel instructed by Deacons Graham & James appeared for the applicants (as respondents to the motion).
