FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Rawson Finances Pty Ltd (No 2) [2016] FCA 402

ORDERS

THE COURT ORDERS THAT:

1.    A letter of request be sent to the judicial authorities of Israel to take or cause to be taken the evidence of Ms Lilach Asher-Topilsky, Chairwoman of the Board of Mercantile Discount Bank. A draft of the proposed letter of request is annexed to these orders and marked “Annexure A”.

2.    The costs of and incidental to the interlocutory application are reserved.

3.    The interlocutory application is otherwise dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE “A”

DRAFT LETTER OF REQUEST

Request for international judicial assistance pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters.

Signature and seal of the requesting authority

Attachment “A” to the letter of request

Nature and purpose of the proceedings and summary of the facts

(article 3, c)

1.    The Applicant in these civil proceedings before the Federal Court of Australia is the Commissioner of Taxation and the Respondent is Rawson Finances Pty Ltd (Rawson), an Australian resident company. The dispute concerns the transmission of funds between Mercantile Discount Bank (MDB) and Rawson between 1997 and 2009.

2.    In the relevant income years, Rawson Finances Pty Ltd claimed that it had loan agreements in place with MDB in respect of which it had made interest payments totalling $2,057,765. It claimed deductions in respect of these interest payments. The loans that Rawson claimed and claims to exist comprise loans totalling AUD 4,750,000 said to have been entered into in June and December 1997. The Commissioner of Taxation issued notices of assessment, amended assessment and notices of penalty to Rawson which disallowed the deductions and increased Rawson's tax liability.

3.    Rawson disputed the Commissioner's decision and commenced proceedings disputing the liability in the Administrative Appeals Tribunal. In the proceedings before that Tribunal, witnesses called on behalf of Rawson gave evidence to the effect that:

a.    Rawson's directors had a family history of setting up special purpose vehicles to taking loans from Israeli Banks;

b.    Israeli Banks operated differently to Australian banks as Israeli Banks were willing to lend on the basis of personal guarantees and relationships with the borrowers. The directors of Rawson and family members of the directors had direct involvement with Israeli Banks through entities known as BCI Finances Pty Ltd, Advance Finances Pty Ltd, Civic Finances Pty Ltd all of which received significant loans from Israeli Banks that were not supported by cash deposits and which were not back to back loans;

c.    The Rawson loans were not supported by any deposit or back-to-back arrangement and MDB was willing to make the loan on the strength of a personal guarantee from a former director of Rawson.

4.    The Tribunal ultimately accepted the above evidence and its decision of Areffco and Commissioner of Taxation [2011] AATA 628 (6 September 2011) upheld the respondent's objections to the increased tax liability. The Commissioner successfully appealed this decision in Commissioner of Taxation v Rawson Finances [2012] FCA 753. However, the Full Court of the Federal Court of Australia allowed Rawson's appeal in Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26.

5.    In 2015, the Commissioner obtained documents which demonstrated that the loans made to BCI Finances Pty Ltd, Advance Finances Pty Ltd and Civic Finances Pty Ltd were secured with cash deposits and were known as back-to-back loans. The documents also indicated that this was known to the witnesses who gave contrary evidence on behalf of Rawson at the time that gave their evidence. In these proceedings, the Commissioner has applied to the Federal Court to have the Tribunal's decision Areffco and Commissioner of Taxation [2011] AATA 628 (and/or the Full Court decision) overturned on the basis it was obtained by fraud.

Attachment “B” to the letter of request

Evidence to be obtained or other judicial act to be performed

(article 3,d)

1.    The evidence to be obtained is the evidence of Lilach Asher-Topilsky, Chairwoman of the Board of Mercantile Discount Bank.

2.    The general nature and subject matter of the examination of Lilach Asher-Topilsky and the nature of the questions to be put during the examination are detailed in attachment “C” to the letter of request.

3.    It is also requested that, in aid of and ancillary to the examination, a subpoena decus tecum, summons or equivalent order which requires Lilach Asher-Topilsky, as the proper officer of Mercantile Discount Bank to produce documents that fall within the categories of documents described in the schedule.

Schedule to Attachment B of Annexure A

1.    All documents recording or evidencing the application for, approval of, granting or making of, and terms of (including terms relating to any security and guarantees), any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1996 to 30 December 2011, including but not limited to any agreement for general business terms; agreement for opening a current account and its management; agreement for credit; agreement for collateral deposit safekeeping; personal guarantee; pledge and set off agreement; notice of pledge or negative pledge undertaking; pledge agreement or deed of pledge or letter of irrevocable instructions in relation to a deed of pledge, bank guarantee, standby letter of credit, application for or conditions of any free foreign currency account, corporate resolutions for the account of Rawson Finances Pty Ltd, any agreement as to the guarantor’s signatures for the account holders, any documents that contain references to a back-to-back loan, any documents that contain references to the differential between the interest rate of the deposit and the interest rate of the loan, any correspondence received from or sent to Rawson Finances Pty Ltd or its agents or representatives including its solicitors, any documents or bank statements that refer to non resident deposit accounts.

2.    For the period 1 January 1997 to 31 December 2013 all documents recording:

2.1    any payments or transfers of funds by Mercantile Discount Bank to Rawson Finances Pty Ltd or any person or entity at the direction of Rawson Finances Pty Ltd;

2.2    any payments or transfers of funds received by Mercantile Discount Bank from Rawson Finances Pty Ltd or from any person or entity at the direction of Rawson Finances Pty Ltd;

2.3    the balance standing to the credit or debit of any loan account, finance facility or deposit account held at Mercantile Discount Bank on behalf of, or in the name of, or for the benefit of Rawson Finances Pty Ltd

3.    All documents recording or evidencing any agreement, arrangement or understanding between Mercantile Discount Bank and Rawson Finances Pty Ltd, or any person or entity acting on behalf of, for the benefit of or in relation to Rawson Finances Pty Ltd, which is or was collateral to, or connected in any way with, any loan, finance facility or advance of money by MDB to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013.

4.    All documents recording or evidencing any communication between Mercantile Discount Bank (or any of its officers, employees, representatives or agents) and Rawson Finances Pty Ltd (including agents, representatives, solicitors or any person acting for, in relation to or on behalf of Rawson Finances Pty Ltd) relating to or in connection with any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013.

Attachment “C” to the letter of request

Questions to be put to the person to be examined or statement of the subject-matter about which they are to be examined

(article 3, f)

1.    The general subject-matter of the examination is the nature of the arrangements between Rawson Finances Pty Limited and Mercantile Discount Bank between 1997 and 2009 and the description, nature and provenance of the documents that have been filed by the applicant in the Federal Court proceedings as well as any documents located, identified and produced by or on behalf of Mercantile Discount Bank in response to a subpoena decus tecum, summons or equivalent order issued or made to Mercantile Discount Bank.

2.    The general nature of the questions to be put to the examinee are detailed in the schedule below, though allowance is to be made for the judicial rules, procedures and practices of the requested State. It may be necessary to ask additional or varied questions depending on what, if any, documents are produced by Mercantile Discount Bank in answer to the subpoena, summons or equivalent order.

Schedule to Attachment C of Annexure A

1.    What is your full name and occupation and where do you work?

2.    What are your duties and responsibilities in your work position?

3.    What was the nature of all the arrangements between Mercantile Discount Bank and Rawson Finances Pty Limited in relation to the transmission of funds between Mercantile Discount Bank and Rawson Finances Pty Limited in the period 1997 to 2009?

4.    In your position, are you aware that a subpoena decus tecum, summons or equivalent order has been issued or made to Mercantile Discount Bank has been issued requiring it to produce documents that fall within specified categories of documents?

5.    Do you have with you and are you able to produce the subpoena decus tecum, summons or order or a copy thereof?

6.    Have searches been made by yourself, or to your knowledge other officers of Mercantile Discount Bank , to locate and identify documents that fall within the categories of documents detailed in the subpoena decus tecum, summons or order?

7.    If yes, what searches have been made?

8.    Have any documents been identified and located as a result of the searches?

9.    If yes, do you produce, or are you aware that there has been produced by Mercantile Discount Bank , documents in answer to the subpoena decus tecum, summons or order?

10.    If yes, the following questions should be put in relation to each document:

10.1    what is the document?

10.2    is it dated and if so, what is its date?

10.3    is the author or maker of the document, if any, known or ascertainable and if so, who was the author or maker?

10.4    does the document, or did the document at any time, form part of the records belonging to or kept by Mercantile Discount Bank?

10.5    does the document contain representations or statements made or recorded in the course of or for the purpose of the business of Mercantile Discount Bank?

10.6    if yes, were the statements or representations made by a person who might reasonably be supposed to have had personal knowledge of the facts in the statements or representations, or on the basis of information directly or indirectly supplied by such a person?

11.    During or as a result of the searches, were any documents identified as having once existed and been in the custody or control of Mercantile Discount Bank, but which either do not now exist, or are no longer in the custody and control of Mercantile Discount Bank and as a result cannot be produced?

12.    If yes, in respect of each such document:

12.1    what is or was the document?

12.2    why is it not possible to produce the document?

12.3    what information, if any, is known about the contents of the document?

REASONS FOR JUDGMENT

PERRY J:

1.    INTRODUCTION

1    These proceedings arise out of the decision by the Administrative Appeals Tribunal (AAT) in Areffco and Commissioner of Taxation [2011] AATA 628 (Areffco) setting aside the decision of the Commissioner of Taxation (Commissioner) to disallow deductions for interest paid on loans from the Mercantile Discount Bank (MDB) to the respondent, Rawson Finances Pty Ltd (Rawson). The AAT decision was successfully appealed to this Court by the Commissioner in Commissioner of Taxation v Rawson Finances Pty Ltd [2012] FCA 753 (Rawson (Federal Court)). However, the Full Court of the Federal Court allowed Rawson’s appeal and dismissed the appeal against the AAT decision: Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26; (2013) 296 ALR 307 (Rawson (Full Court)). By these proceedings, the Commissioner seeks to set aside the decision of the Full Court. Further or in the alternative, the Commissioner seeks to set aside the decisions in Rawson (Federal Court) and Rawson (Full Court) and to quash the AAT decision. Relief is sought on the ground that the decisions were obtained by fraud.

2    By an interlocutory application filed on 12 February 2016, the Commissioner seeks orders pursuant to s 7 of the Foreign Evidence Act 1994 (Cth) (the Foreign Evidence Act) that a letter of request be sent to the judicial authorities of Israel to take or cause to be taken the evidence of Ms Lilach Asher-Topilsky, Chairwoman of the Board of MDB, and to have Ms Asher-Topilsky produce nominated documents “in aid of and ancillary to the examination” (Order 1). To facilitate compliance with that request, a mandatory injunction is also sought requiring Rawson to provide to the Court a document signed by or on behalf of Rawson consenting to MDB producing nominated documents and waiving unconditionally any rights of secrecy, privacy or confidentiality in respect of the documents sought in aid of Ms Asher-Topilsky’s examination (Order 2). In the alternative, the Commissioner seeks an order that Rawson provide to the Commissioner (or his duly appointed agent) any signature, document, permission or authority (including a power of attorney or other authority) required by MDB and any assistance reasonably required by the Commissioner or MDB in order for MDB to release to the Commissioner or his agent, for production to the Court, any documents that fall within nominated categories of documents (Order 3).

3    The effect of these orders, according to the Commissioner, would be to require the giving of evidence on the loan arrangements between Rawson and MDB and with respect to documents which the Commissioner submits are likely to be held by MDB, a third party bank located in Israel. The Commissioner submits that this evidence and the documents sought in aid of the examination relate to certain transactions which are central to the ultimate issue in the substantive proceedings, being the nature of transactions by which funds were transferred between MDB and Rawson.

4    Rawson opposes the interlocutory application on a number of grounds. First, Rawson submits that the application does not satisfy s 7 of the Foreign Evidence Act as it is, in substance, a request for the discovery of documents from a non-party and not the examination of a witness. Secondly, Rawson contends that the application is an abuse of process because it constitutes a “fishing expedition” and/or impermissibly seeks further evidence of fraud when the case to be met is that as at the time that the originating application was filed. Finally, it is submitted that proposed Orders 2 and 3 infringe the privilege against self-incrimination of Rawson’s directors, Andrew and Margaret Binetter, and consequently should not be made in any event.

5    For the reasons given below, I consider that an order should be made in terms of Order 1 sought by the Commissioner. However, I do not consider that it is appropriate for an order to be made in terms of Orders 2 or 3.

2.    EVIDENCE

6    In support of the application, the Commissioner relied upon:

(1)     the affidavit of Thomas Charles Arnold, the solicitor with day to day carriage of the matter for the Commissioner, affirmed on 12 February 2016; and

(2)    those documents contained in the exhibit to Mr Arnold’s 12 February 2016 affidavit and in the exhibit to the affidavit of Thomas Charles Arnold affirmed on 11 September 2015 which were referred to in written or oral submissions for the Commissioner.

7    Rawson did not lead any evidence in response.

3.    BACKGROUND

8    It is not necessary or appropriate to make factual findings on matters likely to be in dispute in the substantive proceedings. The following matters are explained by way of background in order to place the interlocutory application in context and to assist in enabling the questions posed by s 7(2) of the Foreign Evidence Act to be answered, including an assessment to be made of the materiality of the evidence sought by the letter of request.

9    By way of general background, Mr Arnold deposes at [6]-[7] of his affidavit of 12 February 2016 that:

6.     …members of the Binetter family, including Emile Binetter, Erwin Binetter, Andrew Binetter, Margaret Binetter and Gary Binetter, were associated with a number of entities, including the following entities:

(a)    Rawson Finances Pty Ltd…

(b)    BCI Finances Pty Limited (BCI) (in liquidation);

(c)    EGL Development (Canberra) Pty Ltd (EGL) (in liquidation);

(d)    ACN 078 272 867 Pty Limited, formerly Advance Finances Pty Ltd (Advance) (in liquidation);

(e)    ACN 087 623 541 Pty Limited, formerly Civic Finance Pty Ltd (Civic) (in liquidation).

7. …

(a)    Rawson, BCI, Advance and Civic were each a special purpose vehicle that had been incorporated for the sole purpose of obtaining loans from banks resident in Israel and then on-lending funds to other private companies within the Binetter group of companies.

(b)    Each of the entities identified in paragraph above has been involved in proceedings brought by the respective entities pursuant to Part IVC of the Taxation Administration Act 1953 (TAA 53). The entities commenced proceedings in either the Federal Court or Administrative Appeals Tribunal (AAT) as follows:

(i)     BCI (Federal Court) – 12 May 2011 (the BCI Proceedings).

(ii)     Advance (AAT) – 10 July 2012 (the Advance proceedings) of Decision in the AAT in respect of Advance dated 10 July 2012.

(iii)    Civic (AAT) – 10 July 2012 (the Civic proceedings).

(c)    At issue in each of these proceedings was whether the applicant should be assessed on certain sums received from various Israeli banks in respect of transactions which the applicants described as loan transactions and whether the applicant was entitled to deductions in respect of payments in relation to those transactions. In summary, the Commissioner’s case in each of the matters was that the asserted loans were not genuine loans, and if properly characterised as loans, that was not a complete explanation of the relevant arrangements and that the relevant applicant in each proceeding had not discharged its onus of establishing that the relevant assessments were excessive.

(d)    In summary, the cases put forward by the various Binetter entities in the various proceedings was that the moneys received by the entities from the Israeli banks represented genuine loans and were not supported by cash deposits and were not merely a part of some other broader arrangement such as a back to back arrangement.

(e)    A number of contentions were advanced by the various Binetter entities to explain the absence of documents and evidence, inter alia: a fire in a warehouse; the death of Erwin Binetter; the mental incapacity of Emil Binetter; and the general intransigence of Israeli banks in providing documents; to explain the paucity of contemporaneous source material that would usually be expected, given the magnitude and term of the various purported loans.

(Cross-references omitted.)

10    The origins of these proceedings lie in Rawson’s review of the Commissioner’s decision on objection for notices of assessment and amended assessment for each of the years ended 30 June 1997 to 2008, and of a decision on objection for penalty assessments for each of the years ended 30 June 2001 to 2008 (together, the relevant period). The Commissioner had disallowed deductions for interest paid on loans from MDB in Israel. Rawson then commenced proceedings in the AAT on 11 June 2010 (the AAT proceedings).

11    In the course of the AAT proceedings, Rawson adduced evidence from several witnesses. The Commissioner described the effect of that evidence as follows:

a.    Rawson’s directors had a family history of setting up special purpose vehicles to take loans from Israeli Banks;

b.    Israeli Banks operated differently to Australian banks as Israeli Banks were willing to lend to foreign entities on the basis only of personal guarantees and relationships;

c.    the directors of Rawson and family members of the directors had direct involvement with Israeli Banks through various entities including BCI Finances Pty Limited (BCI), Advance Finances Pty Limited (Advance) and Civic Finances Pty Limited (Civic);

d.    each of BCI, Advance and Civic, received significant loans from Israeli Banks that were not supported by cash deposits and which were not back to back loans; and

e.    similarly, [by inference] the Rawson loans were not supported by any deposit or back to back arrangement and MDB was willing to make the loan on the strength of a personal guarantee from a former director of Rawson.

(Emphasis in original.)

12    The evidence referred to above was accepted by the AAT which upheld Rawson’s objections to the increased tax liability: Areffco. As noted earlier, the Commissioner successfully appealed this decision in Rawson (Federal Court). However, Rawson’s appeal from that decision to the Full Court was upheld: Rawson (Full Court).

13    The Commissioner contends in these proceedings that he subsequently obtained documents which demonstrated that the loans made to BCI, Advance and Civic were secured with cash deposits and were known as back-to-back loans, and that this was known to witnesses who gave contrary evidence on behalf of Rawson in the AAT. As such, the Commissioner contends on the evidence currently available to him that the basis on which Rawson ran its case in the AAT has been shown to be false by documents subsequently obtained by the Commissioner and that it should be inferred from the fresh evidence that evidence that the Rawson loans were secured merely by personal guarantees was also false. It is on this basis that the Commissioner currently alleges that the decisions obtained in Rawson’s favour in the AAT proceedings (and/or the Rawson (Full Court) decision) should be overturned on the basis that they were obtained by fraud. In particular, at paragraph 29 of the further amended statement of claim the Commissioner pleads that:

a.    Rawson adduced evidence that the Rawson “loans” the subject of the AAT proceedings were not supported by or related to deposits.

b.    Rawson conducted its case in the AAT proceedings on the basis that the Rawson “loans” were not supported by or related to deposits.

c.    The Rawson “loans” were supported by deposits.

PARTICULARS

This is to be inferred from:

(i)    Proceedings in the Federal Court between BCI Finances Pty Limited and the Commissioner of Taxation (NSD 626 of 2011), including:

i    the evidence filed in those proceedings by BCI from Baruch Etzion and Andrew Binetter and the material obtained in those proceedings which indicated that parts of the evidence so filed was false or materially misleading;

i    the fact that the false or materially misleading evidence so filed was to the same effect as that given by Baruch Etzion in the AAT proceedings;

i    the fact that Andrew Binetter dealt with Baruch Etzion in relation to the repayment of part of the BCI “loan” at a time when it was supported by a deposit in 2004;

i    the fact that Andrew Binetter was in Israel on 15 October 2009 when BH Tel Aviv issued a letter to BCI referring to “B.T.B Loans”;

i    the fact that Andrew Binetter, Gary Binetter and Margaret Binetter consented to being joined to the BCI Proceedings and consented to indemnity costs orders and the circumstances surrounding that consent, in particular the consent being given after material had been obtained in the BCI Proceedings which indicated that the BCI “loans” were in fact supported by or related to deposits, contrary to the case which had been advanced by BCI;

(i.i)    the fact that Andrew Binetter and Mr Michael Binetter sought to pay, and did pay in or about June 2012, an Israeli solicitor to seek to have documents held by BH Tel Aviv destroyed before those documents might be produced to the applicant or to the Court in the context of the BCI proceedings;

(ii)    the fact that AAT proceedings commenced by BinQld, EGL and Ligon 268 (which concerned substantially similar issues) were discontinued after material had been obtained in the BCI Proceedings which indicated that the BCI “loans” were in fact supported by or related to deposits and the Commissioner of Taxation had obtained leave (pursuant to the Harman principles) to use those documents in those AAT proceedings;

(iii)    steps taken by persons and entities associated with Rawson to prevent disclosure of material by Israeli banks including Bank Hapoalim, Mercantile Discount Bank and Israel Discount Bank, relating to transactions with entities associated with Emil Binetter, Erwin Binetter, Andrew Binetter, Margaret Binetter and Gary Binetter;

(iv)    the fact that Rawson conducted its case on the basis that the “loans” to EGL, BCI, Advance and Civic were substantially the same as the “loans” to Rawson and the “loans” to each of EGL, BCI, Advance and Civic were, contrary to the evidence adduced in Rawson, in fact merely some part of a wider back to back transaction.

(v)    the circumstances in which Mr Etzion’s evidence was obtained, as referred to above.

d.    Rawson’s evidence that the loans were not supported by, or related to, deposits was material to the AAT’s decision.

PARTICULARS

(i)    If Rawson had disclosed the true facts concerning the transaction between Rawson and the Mercantile Discount Bank, the AAT would not have set aside the decisions under review.

(ii)    If Rawson had disclosed that each of the purposed “loans” to EGL, BCI, Advance and Civic were in fact merely one part of a wider back to back transaction, the AAT would not have set aside the decisions under review.

14    The evidence which the Commissioner seeks to obtain by this interlocutory application is likely, in the Commissioner’s submission, to afford direct evidence of the falsity of Rawson’s case put in the AAT with respect to Rawson loans, instead of there being inferential evidence only of the fraud as currently particularised at paragraph 29(c) of the further amended statement of claim.

4.    CONSIDERATION

4.1    Relevant provisions

15    It is not in dispute that no representative of MDB is compellable to give evidence in these proceedings other than by the letter of request process under s 7 of the Foreign Evidence Act. Section 7 provides:

7 Orders for taking evidence abroad

(1)    In any proceeding before a superior court, the court may, if it appears in the interests of justice to do so, on the application of a party to the proceeding, make an order, relating to a person outside Australia:

(a)    for examination of the person on oath or affirmation at any place outside Australia before a judge of the court, an officer of the court or such other person as the court may appoint; or

(b)    for issue of a commission for examination of the person on oath or affirmation at any place outside Australia; or

(c)    for issue of a letter of request to the judicial authorities of a foreign country to take the evidence of the person or cause it to be taken.

(2)    In deciding whether it is in the interests of justice to make such an order, the matters to which the court is to have regard include the following:

(a)    whether the person is willing or able to come to Australia to give evidence in the proceeding;

(b)    whether the person will be able to give evidence material to any issue to be tried in the proceeding;

(c)    whether, having regard to the interests of the parties to the proceeding, justice will be better served by granting or refusing the order.

16    The relevant provision in the present case pursuant to which the letter of request is sought to be issued is s 7(1)(c).

17    Section 7(2) sets out the matters to which the Court must have regard in determining whether it is in the interests of justice for an order to be made under s 7(1). As Jagot J observed in BCI Finances Pty Limited v Commissioner of Taxation [2012] FCA 855 (BCI Finances) at [3], s 7(2) “is expressed inclusively and therefore does not provide an exhaustive list of the relevant considerations.”

18    As to s 7(1), first, the phrase in s 7(1)(c) of the Foreign Evidence Act “to take the evidence of the person” (or to cause it to be taken) is to be interpreted in accordance with Australian law and not the law of the country to whom the letter of request addressed: Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 14 FCR 461 (Elna) at 464 (Gummow J) (by analogy).

19    Secondly, as Rawson submits, it is clear from its terms that s 7 does not extend to issuing a request for the production of documents: Elna at 465 (Gummow J). So much is apparent from the fact that the power is expressed as a power to issue a letter of request “to take the evidence of the person” (emphasis added). Thus in Elna, Gummow J refused an application for the issue of a letter of request for evidence to be obtained by an order of the English High Court of Justice for the production of documents. Nor, as Rawson also submits, does s 7 give the Court jurisdiction to order third party discovery of documents or to issue the foreign equivalent of a subpoena duces tecum: Novotny v Todd [2002] WASCA 79 (Novotny) at [53] (McLure J) (by analogy). (An order duces tecum is an order to a person to attend court and produce documents). However, it was not in dispute that s 7 does authorise the issue of a request for orders for the production of documents ancillary to or in aid of the oral testimony of a witness.

20    Finally, the fact that evidence has been obtained through the process for which s 7 provides does not, of course, mean that it will ultimately be admitted in evidence at the trial. In this regard, s 9 of the Foreign Evidence Act expressly provides that:

(1)    Subject to subsection (2), the court may, on such terms (if any) as it thinks fit, permit a party to the proceeding to tender as evidence in the proceeding:

(a)    a person’s evidence taken in an examination held as a result of an order under subsection 7(1); or

(b)    a record of that evidence.

(2)    Evidence of a person so tendered is not admissible if:

(a)    it appears to the court’s satisfaction at the hearing of the proceeding that the person is in Australia and is able to attend the hearing; or

(b)    the evidence would not have been admissible had it been adduced at the hearing.

4.2    Order 1

4.2.1    Terms of the Request sought to be issued

21    Attachment C to Annexure A to the proposed letter of request sets out the questions proposed to be put to Ms Asher-Topilsky and a statement of the subject matter about which she is to be examined; namely:

1.    The general subject-matter of the examination is the nature of the arrangements between Rawson Finances Pty Limited and Mercantile Discount Bank between 1997 and 2009 and the description, nature and provenance of the documents that have been filed produced by the applicant in the Federal Court proceedings as well as any documents located, identified and produced by or on behalf of Mercantile Discount Bank in response to a subpoena decus tecum, summons or equivalent order issued or made to Mercantile Discount Bank.

2.    The general nature of the questions to be put to the examinee are detailed in the schedule below, though allowance is to be made for the judicial rules, procedures and practices of the requested State. It may be necessary to ask additional or varied questions depending on what, if any, documents are produced by Mercantile Discount Bank in answer to the subpoena, summons or equivalent order.

Schedule to Attachment C of Annexure A

1. What is your full name and occupation and where do you work?

2. What are your duties and responsibilities in your work position?

3. What was the nature of all the arrangements between Mercantile Discount Bank and Rawson Finances Pty Limited in relation to the transmission of funds between Mercantile Discount Bank and Rawson Finances Pty Limited in the period 1997 to 2009?

4. In your position, are you aware that a subpoena decus tecum, summons or equivalent order has been issued or made to Mercantile Discount Bank has been issued requiring it to produce documents that fall within specified categories of documents?

5. Do you have with you and are you able to produce the subpoena decus tecum, summons or order or a copy thereof?

6. Have searches been made by yourself, or to your knowledge other officers of Mercantile Discount Bank , to locate and identify documents that fall within the categories of documents detailed in the subpoena decus tecum, summons or order?

7. If yes, what searches have been made?

8. Have any documents been identified and located as a result of the searches?

9. If yes, do you produce, or are you aware that there has been produced by Mercantile Discount Bank, documents in answer to the subpoena decus tecum, summons or order?

10. If yes, the following questions should be put in relation to each document:

9.1    what is the document?

9.2    is it dated and if so, what is its date?

9.3    is the author or maker of the document, if any, known or ascertainable and if so, who was the author or maker?

9.4    does the document, or did the document at any time, form part of the records belonging to or kept by Mercantile Discount Bank?

9.5    does the document contain representations or statements made or recorded in the course of or for the purpose of the business of Mercantile Discount Bank?

9.6    if yes, were the statements or representations made by a person who might reasonably be supposed to have had personal knowledge of the facts in the statements or representations, or on the basis [of] information directly or indirectly supplied by such a person?

11. During or as a result of the searches, were any documents identified as having once existed and been in the custody or control of Mercantile Discount Bank, but which either do not now exist, or are no longer in the custody and control of Mercantile Discount Bank and as a result cannot be produced?

12. If yes, in respect of each such document:

11.1    what is or was the document?

11.2    why is it not possible to produce the document?

11.3    what information, if any, is known about the contents of the document?

22    Those parts of the Schedule to Attachment C which were included only in the amended version of the Schedule annexed to the Commissioner’s submissions in reply are underlined.

23    The documents in respect of which a request is sought for production in aid of and ancillary to the examination are set out in the Schedule to Attachment B of Annexure A to the proposed letter of request and are as follows:

1.    All documents recording or evidencing the application for, approval of, granting or making of, and terms of (including terms relating to any security and guarantees), any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1996 to 30 December 2011, including but not limited to any agreement for general business terms; agreement for opening a current account and its management; agreement for credit; agreement for collateral deposit safekeeping; personal guarantee; pledge and set off agreement; notice of pledge or negative pledge undertaking; pledge agreement or deed of pledge or letter of irrevocable instructions in relation to a deed of pledge, bank guarantee, standby letter of credit, application for or conditions of any free foreign currency account, corporate resolutions for the account of Rawson Finances Pty Ltd, any agreement as to the guarantors signatures for the account holders, any documents that contain references to a back-to-back loan, any documents that contain references to the differential between the interest rate of the deposit and the interest rate of the loan, any correspondence received from or sent to Rawson Finances Pty Ltd or its agents or representatives including its solicitors, any documents or bank statements that refer to non resident deposit accounts.

2.    For the period 1 January 1997 to 31 December 2013 all documents recording:

2.1    any payments or transfers of funds by Mercantile Discount Bank to Rawson Finances Pty Ltd or any person or entity at the direction of Rawson Finances Pty Ltd;

2.2    any payments or transfers of funds received by Mercantile Discount Bank from Rawson Finances Pty Ltd or from any person or entity at the direction of Rawson Finances Pty Ltd;

2.3    the balance standing to the credit or debit of any loan account, finance facility or deposit account held at Mercantile Discount Bank on behalf of, or in the name of, or for the benefit of Rawson Finances Pty Ltd

3.    All documents recording or evidencing any agreement, arrangement or understanding between Mercantile Discount Bank and Rawson Finances Pty Ltd, or any person or entity acting on behalf of, for the benefit of or in relation to Rawson Finances Pty Ltd, which is or was collateral to, or connected in any way with, any loan, finance facility or advance of money by MDB to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013.

4.    All documents recording or evidencing any communication between Mercantile Discount Bank (or any of its officers, employees, representatives or agents) and Rawson Finances Pty Ltd (including agents, representatives, solicitors or any person acting for, in relation to or on behalf of Rawson Finances Pty Ltd) relating to or in connection with any loan, finance facility or advance of money by Mercantile Discount Bank to Rawson Finances Pty Ltd during the period 1 January 1997 to 31 December 2013.

4.2.2    Whether the application is in substance a request for discovery and production of documents from a non-party

24    Rawson contends that:

The proposed letter of request is in substance a request for the discovery and production of documents by a third party not the taking of evidence of a person. The only ‘evidence’ sought from the witness is directed solely to the provenance of the documents to be produced and is no more than a Trojan horse for the discovery and production of those documents. The production of the documents described in Attachment B are on no view ‘ancillary’ to the examination of the witness – they are the raison d’etre of the request. Moreover, it is pellucid that the ‘evidence’ sought from the witness is not “material to any issue tried in the proceeding”.

Consequently the request is not only beyond the power granted by s.7(1)(c) of the [Foreign Evidence Act], the ‘evidence’ of the witness fails to satisfy the materiality requirement in s.7(2)(b).

(Citations omitted.)

25    With respect, I do not agree. In my view, the Commissioner correctly submits that the purpose of the letter of request is to have the nature of the transactions that occurred between MDB and Rawson explained and the letter of request is not, therefore, properly characterised as in substance a request for discovery and production. Equally, as I later explain, I consider that the evidence sought from Ms Asher-Topilsky is material to the main issues in the proceedings.

26    First, the general subject-matter of the examination includes the description, nature and provenance of documents already in the Commissioner’s possession: see paragraph 1 of Attachment C to Annexure A. Those documents include documents with respect to loans to Advance also made by MDB. For example, a letter dated 24 February 2000 from Emil Binetter for Advance to MDB contains a request with respect to “any fiduciary investments” that the Bank may hold for Advance, while a letter dated 23 March 2004 from MDB to Emil Binetter relating to a loan from MDB to Advance contains a certified translation of handwriting in Hebrew stating “[t]his is a back to back loan”. As I have already noted, reliance was placed by Rawson upon the nature of the transactions between MDB and Advance as part of its case in the AAT, and the documents with respect to the loans from Advance obtained after the conclusion of the AAT proceedings and related appeals form part of the basis on which the Commissioner intends to contend that the AAT decision and decision of the Full Court were obtained by fraud. Plainly insofar as the request relates to documents already in the Commissioner’s possession, it cannot be characterised as a request for production or third party discovery.

27    Secondly, I accept that the documents sought to be produced are properly sought as ancillary to, and in aid of, the request to examine Ms Asher-Topilsky about the nature of the transactions between MDB and Rawson. As the Commissioner submits, given that Ms Asher-Topilsky may not herself have direct knowledge of some or all of the events concerning the dealings between MDB and Rawson over the whole period from 1997, she may need to explain the transactions through the documents filed in these proceedings and the documents to be produced, both in terms of their content and in the context of MDB’s processes. It follows that I accept the Commissioner’s submission that the addition of question 3 to the Schedule to Attachment C of Annexure A did not do more than identify what plainly underlies the proposed questions in the Schedule to Attachment C of Annexure A in any event.

28    Thirdly, it is not in my view a valid objection to the issue of a letter of request under s 7 that several of the questions sought to be asked appear largely to be directed to ascertaining the provenance, or providing a foundation for the admissibility of, the documents to be produced or already within the Commissioner’s possession where, as here, those documents are material to the issues. Thus, while Anderson J in Novotny did not address the question, McLure J held at [49] that:

…testamentary evidence relating solely to securing the admission of relevant documentary evidence is evidence material to an issue to be tried in the proceedings for the purposes of s 110(2)(b) of the Evidence Act. Further, it matters not that the testamentary evidence alone does not render the document admissible. It is sufficient if the evidence facilitates or is part of a necessary evidential foundation which enlivens the court’s discretion to admit documents at trial, which documents are themselves material to the issue in the proceedings.

29    In so holding, McLure J rejected a distinction between testamentary evidence concerning an issue in the proceedings, on the one hand, and testamentary evidence solely directed at rendering admissible documentary evidence that is material to an issue in the proceedings, even if the witness is unable to give evidence in connection with the contents thereof or any other relevant matter, on the other hand (ibid). I consider McLure J’s construction of s 110(2)(b) of the Evidence Act 1906 (WA) is equally applicable to s 7 of the Foreign Evidence Act as s 110(2)(b) is not materially different. Evidence which renders admissible or facilitates the admission of documentary evidence which is material to a matter in issue is, in my view, evidence material to that issue on an ordinary reading of the language in s 7. In this regard, the requirement of materiality in s 7(2)(b) is broadly expressed with the evident purpose of facilitating the administration of justice in the individual case where the evidence in question is beyond the capacity of an Australian Court to compel. Nor would any apparent purpose be served in reading the provision down to exclude evidence about such issues. It is not difficult, for example, in a largely documentary case in the corporations or taxation fields to envisage the impact on a party’s case if crucial documents could not be admitted or their provenance proved.

30    The decision in BCI Finances is an illustration of a case where the Court issued a letter of request for the taking of evidence as to the provenance of documents and for production of documents ancillary to that request. In that case the Commissioner sought an order that a letter of request be sent to the judicial authorities of Israel to take the evidence of an officer of Bank Hapoalim (a bank based in Israel) of the bank’s systems in relation to its administration of its credit arrangements, its processes for requiring and maintaining documents, and its processes and systems for ensuring the provenance and authenticity of documents. The Commissioner’s position was that the available evidence was insufficient to support the existence of the arrangements as loans and that the genuineness of the arrangements was in question, and accordingly submitted that the provenance, integrity and adequacy of the documents evidencing their loans and other arrangements between BCI and the foreign bank were themselves a critical issue in the proceedings (at [6]). BCI however, submitted among other things that the application was akin to an application for discovery by third-party, insofar as it referred to oral evidence the application was merely ancillary to the production of documents, and the Court should not be satisfied that the identified officer would be able to give any relevant evidence to the facts in issue (at [16]). Her Honour upheld the Commissioner’s submissions, accepting that a central issue in the proceedings was the provenance, integrity and adequacy of the documents evidencing the loans and other arrangements and on that basis found at [20] that the materiality requirement in s 7(2) of the Foreign Evidence Act was satisfied.

31    It follows, therefore, that the fact that the proposed questions are largely directed to the provenance of the documents and matters relevant to their admissibility and weight does not establish that the request is really a ‘Trojan horse’ for discovery and production, contrary to Rawson’s submissions. I do not accept the submission by Rawson put in the abstract that the court can determine provenance simply by looking at the documents and that Ms Asher-Topilsky’s “evidence will add absolutely nothing in the real world to their admissibility.” This is particularly so in a case where the cause of action is fraud which must be strictly proved.

32    I am reinforced in my characterisation of the request by the significant differences between the request sought to be issued in this case, on the one hand, and that rejected in Novotny on which Rawson relies, on the other hand. In Novotny, Anderson J rejected the application for the issue of a letter of request under s 110(1)(c) of the Evidence Act 1906 (WA) on the ground that:

…it is quite clear that the object of the respondent’s application for the issue of letters of request is to obtain third-party discovery from the three foreign companies concerned. However they may be dressed up, that is the purpose of the letters of request. In substance, the orders made pursuant to the letters of request would be nothing more than orders duces tecum.

33    In reaching that view, Anderson J held:

That this is their purpose is to be inferred from the way in which the proposed witnesses are described (“ the proper officer of…”), the generalised description and very large number and diversity of the documents which the witnesses would be ordered to bring with them to the Supreme Court of British Columbia, the lack of particulars or evidence as to the existence and materiality of the enumerated documents and the complete absence of information on which this Court could conclude that the proposed witnesses have anything worthwhile to say about the issues joined on the pleadings.

34    As a result, Anderson J held that the Master erred in granting the orders issuing the letters of request. Justice McClure considered that the question should be addressed by reference to the criterion of materiality as in her Honour’s view it was not particularly helpful to define the limits of the power by reference to concepts of “discovery” and “fishing” because they fail precisely to identify the basis of the objection. Nonetheless, her Honour reached the same result as Anderson J, holding that the applicant’s evidence of materiality was:

…inappropriately general. Further, the respondent conceded that he is unable to establish the existence or materiality of all the documents in the schedules to the letters of request. Finally, the proper officers would be unable to give any relevant evidence directed to the admissibility of many of the requested documents such as those received from third parties.

35    The present case is different in a number of significant respects.

(1)    The proposed witness is identified by name, as opposed to being identified simply as the proper officer.

(2)    The questions are directed to ascertaining the nature of the arrangements between Rawson and MDB, and between Advance and MDB, and in particular whether they were fraudulently represented in the AAT, which are the primary issues raised in these proceedings, and to facilitating the admission of documentary evidence relevant to that issue.

(3)    The classes of documents identified in the Schedule to Attachment B of Annexure A are precisely described and are all documents likely to bear directly upon the question of the nature of the arrangements between Rawson and MDB in the relevant period in relation to the transmission of funds between MDB and Rawson including, for example, documents recording the making of loans or advances of money and the terms of such transactions, and all documents recording or evidencing any agreement, arrangement or understanding which was collateral to any such loan or advance.

(4)    As Chairperson of the MDB, it can fairly be inferred that Ms Asher-Topilsky understands the Bank’s procedures and practices, and has the authority to make inquiries within the Bank in relation to the provenance of the documents in question and as to the other matters on which questions are sought to be asked, to the extent to which they are not matters within her own knowledge in any event.

36    It follows in my view that the application is not properly characterised as a request for the production, or discovery, of documents.

4.2.3    Whether the application is an abuse of process

37    Rawson also contends that the current application is an abuse of process on the ground that it can be characterised only as a fishing expedition. For the reasons set out at [35] above, I do not consider that the proposed letter of request is a fishing expedition in the sense that an unjustifiably wide net has been cast. However, the basis on which the submission is put in Rawson’s written submissions is that:

8.    Further, the Commissioner’s cause of action in the principal proceeding has the following two elements, inter alia: i) there must be the discovery of fresh evidence that was not available at the trial and could not have been discovered with reasonable diligence and ii) it is reasonably clear that if that evidence had been adduced at the hearing it would have produced the opposite result.

9.    It follows that the cause of action can only arise in limine [i.e. at the threshold] if the Commissioner has discovered ‘fresh evidence’ subsequent to the original hearing. As the Court of Appeal held in Wentworth v Rogers (No 5):

the action to set aside the judgment on the ground that it had been procured by fraud must be based upon something newly discovered, after the first trial. It must not amount to a challenge to a matter canvassed in that trial

10.    Consistent with the elements of the cause of action, the Commissioner has pleaded the nature of the alleged ‘fresh evidence’ that he discovered subsequent to the hearing. That evidence does not include the evidence now sought under the [Foreign Evidence Act] Application.

11.    Given it is a fundamental precondition of the Commissioner’s cause of action that he has discovered ‘fresh evidence’, it is not open to him to use the Court’s processes to gather additional evidence beyond that pleaded as the ‘fresh evidence’ said to give rise to his cause of action – his case stands or falls on that evidence.

(Citations omitted.)

38    If correct, this restriction would preclude a party from relying upon any fresh evidence which might come to light after instituting proceedings to set aside a judgment on the grounds it was fraudulently obtained or be sought as a result of the compulsive processes of the Court after the institution of such proceedings, as counsel for Rawson accepted. Taken to its logical conclusion, that proposition would mean, for example, that a witness could not be subpoenaed to give evidence at the trial bearing on the issue of fraud.

39    No authority was cited for the proposition that this principle applied to an application to quash an administrative decision and no submission was made that it would so apply. Nor do I accept the submission that by virtue of the cause of action, an applicant lacks the capacity to obtain and rely upon relevant and admissible evidence obtained after proceedings have been instituted in establishing that a judgment of a Court should be set aside on the basis that it was procured by fraud. I do not consider that Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 (Wentworth (No 5)), upon which Rawson relies, lends support to so narrow a view. As Kirby P held in Wentworth (No 5), among the elements of the cause of action “…it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment” (at 538). However, nothing in that statement or elsewhere in his Honour’s reasons confines the evidence which may be led to that available when proceedings are instituted. Counsel for Rawson were unable to direct the Court’s attention to any other authority that stood for the proposition sought to be put.

40    Nor when regard is had to the rationale for the requirement to establish that material facts have subsequently come to light does it follow that the fresh evidence available to establish the fraud should be so confined. In this regard Kirby P explained in Wentworth (No 5) that that requirement is based upon a number of grounds (at 538):

There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to relitigate matters which were the subject of the earlier proceedings which gave rise to the judgment. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgment of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court’s process preserved.

41    Reliance on additional fresh evidence of fraud obtained after proceedings are instituted does not suffer from the vices contemplated by Kirby P. Moreover in my view, there is equally a public interest in ensuring that a judgment is overturned where the procurement of a judgment by fraud can be established in accordance with the strict proof required to establish such a charge by evidence later discovered, whether in conjunction with or apart from the evidence originally before a Tribunal or Court. There is no reason, in my view, for saying that the public interest in finality effectively ‘trumps’ preservation of the integrity of the Court’s processes such that it requires that a litigant be confined to the further evidence available to her or him at the time of commencing the action to overturn the judgment. To suggest otherwise may result in the very principles intended to preserve the integrity of Court processes being applied so as in effect to facilitate the ‘covering up’ of the fraud. In so saying I do not imply that particulars of the fraud alleged must not be exactly given irrespective of the stage of the litigation: Wentworth (No 5) at 538; r 16.42 of the Federal Court Rules 2011 (Cth). Nor do I imply that at the commencement of proceedings, the legal representatives should not be satisfied of the existence of fresh evidence sufficient to plead the fraud, given the seriousness of such an allegation. As, for example, Lord Wilberforce said in The Ampthill Peerage [1977] AC 547 at 571:

Authorities as to judgments make clear that anyone wishing to attack a judgment on the grounds of fraud must make his allegation with full particularity, must when he states it be prepared to prove what he alleges and ultimately must strictly prove it. The establishment of the fraud is a condition precedent to reopening the case: (see Jonesco v Beard) [1930] AC 298.

4.2.4    Whether Ms Asher-Topilsky is willing or able to come to Australia to give evidence in the proceeding (s 7(2)(a), Foreign Evidence Act)

42    As to the question of whether Ms Asher-Topilsky is willing to come to Australia to give evidence, first, as earlier mentioned it was not in issue that no representative of MDB is compellable to give evidence in these proceedings otherwise than by the letter of request process.

43    Secondly, Rawson’s evidence in the AAT proceedings suggests that no officer of MDB would be willing to come to Australia to give evidence in these proceedings. In this regard, it was not in issue before the AAT that the Tribunal lacked power to compel an overseas witness to give evidence. In its submissions in opening in the AAT, Rawson relied as circumstances relevant to weighing the evidence (or lack thereof) upon the fact that the MDB “is out of Rawson’s control and its officers are not compellable to attend to give evidence in the AAT” and that:

Andrew Binetter, the director of Rawson, and his solicitors have made extensive attempts to:

(i)    persuade the Bank’s officers (Zamir or other officers) and former bank officers (Elie Septon) and other lay witnesses (Perry, Loewbeer) to give evidence and be available at the hearing…

44    Similarly, in its reply submissions in the AAT, Rawson contended that it took all reasonable steps to procure the attendance of Mr Israel Zamir (an officer of MDB) or another suitable witness. The evidence relied upon by Rawson in this regard included a conversation on 4 April 2011 between Mr Douglass, Rawson’s legal representative, and Mr Mintz, a legal officer of MDB, seeking Mr Zamir to give evidence and requesting assistance with accessing the MDB documents in relation to Rawson. In the course of that conversation Mr Mintz advised that MDB would not give him access to the Rawson file “because we need a Power of Attorney from the client. It does not matter that the client was at our meeting on 31 March 2011; we still need a Power of Attorney.” Mr Douglass also deposed that he was told that, even if a Power of Attorney was provided, access would not be given to him to access the bank files and, when Mr Mintz was asked if he had spoken to Mr Zamir and his bank manager about being available to give evidence, Mr Mintz replied that “[t]he bank will not be giving any more evidence”. In cross examination in the AAT on the question of whether he had put to the bank that they had documents which had not yet been produced to him, Mr Douglass responded “I’m sure they’ve got documents that they haven’t produced.”

45    Thirdly, no evidence was led by Rawson to suggest that Ms Asher-Topilsky was willing to come to Australia to give evidence in the proceeding; nor were submissions made to that effect. Nor was any evidence given that Rawson is willing to request her attendance or to take any such steps as might be required to obtain production of the documents identified in the proposed request. While I make no finding as to its motivation, it can be inferred from Rawson’s opposition to the present interlocutory application that Rawson has no such intention notwithstanding the expert evidence led by the Commissioner in the AAT proceedings that:

Rawson is entitled to obtain complete copies from Mercantile Discount Bank of all the documentation concerning its account, the loans and the collateral as described above. Furthermore and even beyond the above-mentioned documentation that the bank is obligated to disclose, from my practical experience, if so instructed by the client, an Israeli bank is expected to fully cooperate and try to assist his client to the best of his ability, including by way of disclosing documents, information and in the absence of same by way of an official statement of facts.

46    In the result, I am satisfied that it can be inferred on all of the evidence that there is no real prospect that Ms Asher-Topilsky would be willing or able to come to Australia to give evidence in the proceedings: see also by analogy Jagot J in BCI Finances at [19].

4.2.5    Whether Ms Asher-Topilsky will be able to give evidence material to any issue to be tried (s 7(2)(b), Foreign Evidence Act)

47    It follows for the reasons already given as to why I do not consider that the application is in substance a request for discovery nor that the Commissioner is restricted to new evidence available when these proceedings were commenced that I consider that it is likely that Ms Asher-Topilsky will be able to give evidence material to the issues to be tried in the proceedings so as to satisfy the requirement in s 7(2)(b) of the Foreign Evidence Act: see in particular at [25]-[35] and [39]-[41] above.

4.2.6    Where the interests of justice best lie (s 7(2)(c), Foreign Evidence Act)

48    I accept the Commissioner’s submission that the interests of justice are best served by an order in terms of proposed Order 1 to issue a letter of request for the examination of Ms Asher-Topilsky and for the production of the nominated documents in aid of and ancillary to the examination. In particular, given the evidence already obtained by the Commissioner in relation to the nature of the transactions between BCI, Advance and Civic, I consider that there is a sufficient basis in the evidence on which to infer that the evidence sought from Ms Asher-Topilsky as to the nature of the transactions between Rawson and MDB is likely to materially assist in resolving an issue in the proceedings in a direct way. Nor in the event that their other objections were not accepted did Rawson contend otherwise.

4.3    Orders 2 and 3

49    The Commissioner also sought mandatory injunctions in the following terms:

2.    The respondent provide to the Court a document signed by or on behalf the respondent in the form of the document in “Annexure B” to the proposed letter of request in aid of and for transmission with the letter of request.

3.    Alternatively to orders 1 and 2, the respondent, within seven days of the making of this order, provide to the applicant, or his duly appointed agent:

a.    any signature, document, permission or authority (including a power of attorney or other authority) required by Mercantile Discount Bank; and

b.    any assistance reasonably required by the applicant or Mercantile Discount Bank

in order for Mercantile Discount Bank to release to the applicant or his agent, for production to the Court, any documents that fall within the categories of documents described in “Annexure C” to this Interlocutory Application.

50    Annexure B provides:

The purpose of this letter is to confirm and advise that Rawson Finances Pty Ltd consents to Mercantile Discount Bank producing any and all documents that fall within the categories of documents listed in the schedule to this letter in accordance with any subpoenae decus tecum, summons or equivalent order issued or made by any Israeli court, tribunal or judicial officer. For these purposes, Rawson Finances Pty Ltd unconditionally waives any rights of secrecy, privacy or confidentiality in respect of the documents that may arise or exist by reason of its relationship with Mercantile Discount Bank

51    The categories of documents listed in the Schedule to the draft letter in Annexure B and the categories of documents described in Annexure C are the same categories of documents as those described in the Schedule to Attachment B of Annexure A set out at [23] above.

52    As Rawson contends, in substance Orders 2 and 3 would compel Andrew and Margaret Binetter, as the directors of Rawson, to “consent” to or authorise disclosure of the documents sought by the Commissioner. On this basis, Rawson contends that these orders should be refused for the reason that they would infringe Andrew and Margaret Binetter’s privilege against self-incrimination.

53    The privilege against self-incrimination is not merely a rule of evidence, but a fundamental common law right. It “protects the witness not only from incriminating [herself or] himself directly under a compulsory process, but also from making a disclosure which may lead to incrimination or to the discovery of real evidence of an incriminating character”: Sorby v Commonwealth (1983) 152 CLR 281 (Sorby) at 310 (Mason, Wilson and Dawson JJ). It is sufficient, in other words, if the statement or document may set “in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character”, as Lord Wilberforce said in Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 at 443. Furthermore, in reliance on the privilege, not only may a person refuse to answer any question, but also “to produce any document or thing if to do so ‘may tend to bring him into the peril and possibility of being convicted as a criminal’: Lamb v Munster [(1882) 10 QBD 110 at 111]”: Sorby at 288 (Gibbs CJ) (Mason, Wilson and Dawson JJ agreeing at 310); see also Reid v Howard (1995) 184 CLR 1 at 6 (Deane J). As Gibbs CJ further explained in Sorby at 294:

It is a cardinal principle of our system of justice that the Crown must prove the guilt of an accused person, and the protection which that principle affords to the liberty of the individual will be weakened if power exists to compel a suspected person to confess his guilt. Moreover the existence of such a power tends to lead to abuse and to ‘the concomitant moral deterioration in methods of obtaining evidence and in the general administration of justice’…

See also e.g. Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 (Daniels) at 559 [31] (Gleeson CJ, Gaudron, Gummow and Hayne JJ).

54    It is, of course, necessary for any claim to privilege to be reasonable and made in good faith, although “courts err on the side of caution lest an apparently innocuous disclosure has unforeseen adverse consequences…”, as Mason P pointed out in MacDonald v Australian Securities and Investments Commission [2007] NSWCA 304; (2007) 73 NSWLR 612 at 624 [67] (with whose reasons Giles JA agreed).

55    It was rightly not suggested that any provision of the Foreign Evidence Act abrogated the privilege.

56    In my view, Rawson’s objection to the second and third orders sought should be upheld on the ground that they would infringe Andrew and Margaret Binetter’s privilege against self-incrimination.

57    First, it is pleaded in the further amended statement of claim among other things that:

(1)    Rawson knew that members of the Binetter family gave gifts and money to Mr Baruch Etzion (an expert witness in the AAT proceedings) with the intended purpose of him giving evidence known by Rawson to be false or materially misleading, including that it was normal practice for Israeli banks to give loans secured only by personal guarantee;

(2)    to the knowledge of Rawson and Andrew Binetter, Andrew Binetter gave oral evidence, including that no companies with which he was associated had monies on deposit with either the MDB or Israel Discount Bank and that loans were secured only by personal guarantee, which was false or materially misleading; and

(3)    to the knowledge of Rawson and Margaret Binetter, the evidence of Margaret Binetter included evidence which is false and misleading in conveying that neither she nor Erwin Binetter had overseas assets.

58    With respect to [57(1)] above in particular, even though a corporation has no privilege against self-incrimination (Daniels), a company can act only through its officers, and the state of mind of the company is (generally) that of the director: Beach Petroleum NL v Johnson (1993) 43 FCR 1 at 31-32 (von Doussa J). In this regard, Rawson accepts in its written submissions that:

In the present case the only directing minds and will of Rawson during the conduct of the AAT and Federal Court proceedings were Andrew and Margaret Binetter.

Consequently, the allegations of Rawson’s knowledge and conduct adverted to above are in substance allegations against the individual directors. This is particularly the case in respect of the allegation that Andrew Binetter’s evidence was false or materially misleading.

59    Secondly, I accept that the allegations in the pleadings summarised above, if proved to the criminal standard, would be likely to constitute one or more dishonesty offences under the Criminal Code in the Criminal Code Act 1995 (Cth). As Rawson contends, ss 134 and 135 of the Criminal Code are of particular relevance potentially, providing that a person is guilty of an offence if a person does anything with the intention of dishonestly obtaining a gain from, or causing a loss to, a Commonwealth entity (s 135), or dishonestly obtaining a financial advantage from a Commonwealth entity (s 134). As Rawson also contends, the offence of perjury in s 35 of the Crimes Act 1914 (Cth) is also potentially applicable.

60    Thirdly, as Rawson contends, the evidence and documents which the Commissioner seeks are self-evidently sought because the Commissioner considers that they are likely to assist him in establishing these allegations. It can also properly be inferred from the evidence relied upon by the Commissioner in support of the interlocutory application and surrounding circumstances that, if produced, the documents sought in the request may tend to incriminate Andrew and Margaret Binetter.

61    Fourthly, it is necessary for the purposes of considering the risk of prosecution to proceed on the assumption that the evidence sought by the letter of request will be incriminating. On that assumption, I do not regard the risk of prosecution of Andrew and Margaret Binetter as remote or unlikely but, given among other things the seriousness of the allegations, consider that it is real and appreciable: Re Intercontinental Development Corporation Pty Ltd (1975) 1 ACLR 253 (quoted with approval in Re New World Alliance Pty Limited (Receiver and Manager Appointed); Sycotex Pty Limited v Baseler (1993) 47 FCR 90 at 96 (Sheppard J)).

62    In those circumstances, I refuse the Commissioner’s interlocutory application in so far as it seeks orders in terms of Order 2 or Order 3.

63    Further and in any event, the evidence relied upon by the Commissioner was not sufficient to establish the need for Orders 2 or 3 to be made. In contrast to the position in BCI Finances at [25], the evidence in support of Orders 2 and 3 went no higher than to demonstrate that, where consent was given by the account holder or borrower, the Israeli Bank would be likely to produce the documents in its possession which are relevant to the transactions. It did not go so far as to establish that, in the absence of consent, the procedures engaged by the Israeli court through the issue of the letter of request would not suffice to result in disclosure or production by MDB of documents relating to Rawson’s transactions.

64    Finally, I note that Rawson also raised a question as to whether an order in terms of Order 2 would be appropriate given that the order would require Rawson to give “consent” to the production of documents notwithstanding that Rawson in fact opposed the making of the orders and therefore that any such “consent” would not be voluntary. It is, however, unnecessary for me to reach a view on this question given the conclusions that I have already reached.

5.    CONCLUSION

65    For the reasons given above, I find that it is appropriate to make Order 1 of the interlocutory orders sought for the issue of a letter of request to the judicial authorities of Israel to take or cause to be taken the evidence of Ms Lilach Asher-Topilsky, Chairwoman of the Board of MDB, and for the production of documents in aid of, or ancillary to, that examination. However, I do not consider that Orders 2 and 3 should be made as those orders would, in my view, infringe the privilege against self-incrimination of the two directors of Rawson.

Associate:

Dated:    22 April 2016