Devine Erby Mazlin (Qld) Pty Ltd, Re [1996] QCA 453 [1998] 1 Qd R 592

IN THE COURT OF APPEAL [1996] QCA 453 SUPREME COURT OF QUEENSLAND Appeal No. 7677 of 1996. Brisbane [Holiday Villages v. Devine Erby Mazlin & Ors.] BETWEEN: HOLIDAY VILLAGES (AUSTRALIA) PTY LTD (Respondent) Appellant AND: DEVINE ERBY MAZLIN (QLD) PTY LTD, HAYSOM GROUP ARCHITECTS PTY LTD, JOHN FOWELL, CHRIS EVERDING, MALCOLM MIDDLETON and ED HAYSOM (Applicants) Respondents ___________________________________________________________________________ McPherson J.A. Pincus J.A. Derrington J. ___________________________________________________________________________ Judgment delivered 19 November 1996 Separate Reasons for Judgment of each member of the Court, all concurring as to the orders made. ___________________________________________________________________________ 1. APPEAL ALLOWED WITH COSTS. 2. ORDERS NOS. 1 AND 3 MADE BELOW ON 9 SEPTEMBER 1996 SET ASIDE. 3. IN LIEU, ORDER THE APPLICATION TO SET ASIDE THE SUBPOENAS MENTIONED IN ORDER NO. 1 BELOW BE DISMISSED WITH COSTS. ___________________________________________________________________________ CATCHWORDS: Subpoenas - whether interfere with proper disposition of litigation in the Supreme Court of Queensland - same or similar issues in two proceedings - contempt - usurpation of court’s function - arbitration proceedings in New South Wales - action in Supreme Court of Queensland - "dress rehearsal" - risk of adverse consequences flowing from publicity - lack of legal representation - nature of contempt. The Sentry Corporation v. Peat Marwick Mitchell & Co. & Ors. (1990) 24 F.C.R. 463. Counsel: Mr P A Keane Q.C. with him Mr S J Lee for the appellant/ respondent. Mr P Donohoe with him Mr J D McKenna for the respondent/ applicants. -- 1 of 17 -- Solicitors: O’Shea Corser & Wadley for the appellant/respondent. Gadens Ridgeway for the respondent/applicants. Hearing date: 4 November 1996. -- 2 of 17 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No.7677 of 1996 Brisbane Before Pincus J.A. McPherson J.A. Derrington J. [Holiday Villages (Aust.) P/L. v. Devine Erby Mazline (Qld) P/L. & Ors.] BETWEEN HOLIDAY VILLAGES (AUSTRALIA) PTY. LTD. (Respondent) Appellant AND DEVINE ERBY MAZLIN (QLD.) PTY. LTD., HAYSOM GROUP ARCHITECTS PTY. LTD., JOHN FOWELL, CHRIS EVERDING, MALCOLM MIDDLETON AND ED HAYSOM (Applicants) Respondents REASONS FOR JUDGMENT - McPHERSON J.A. Judgment delivered the 19th day of November 1996 I agree with the reasons of Pincus J.A.. Like his Honour, I can see no justification for the bare proposition that issuing and serving a subpoena on a witness to attend and testify in one set of proceedings involves, or may involve, a contempt of court if the same person is likely to be called to give evidence in other proceedings in the same or another court. It is, I suppose, possible to conceive of particular circumstances in which such conduct might constitute contempt: for example, if the intention and effect of issuing and serving the subpoena was to ensure that the witness was thus prevented from giving evidence in the proceedings in court. The Sentry Corporation v. Peat Marwick Mitchell -- 3 of 17 -- 4 & Co. (1990) 24 F.C.R. 463, referred to by Pincus J.A., is another example of that general kind; but the present case does not even remotely resemble either of those two instances. The only other possible basis on which the notion could be entertained is that, for an inferior court or tribunal to proceed with the hearing of a matter when the questions before it are simultaneously in issue and awaiting determination in proceedings in the Supreme Court, amounts to a contempt because it constitutes a “usurpation” of the jurisdiction of that Court. At one time it used to be suggested that, once it became known to an inferior tribunal that Supreme Court proceedings involving the same question or questions were pending, it was or might be a contempt for the inferior tribunal, which was otherwise acting within its jurisdiction, to continue with a hearing of those questions itself; or perhaps that, when that state of affairs arose, the jurisdiction of the inferior tribunal was “ousted”. The notion is one for which, in Boyd v. Halstead, ex parte Halstead [1985] 2 Qd.R. 249, I thought there was little or no authority. The position might be different if the prior determination of the same question in the inferior court or tribunal seriously threatened to raise an issue estoppel in the Supreme Court; or perhaps if there was sound reason for supposing that publicity associated with it might prejudice the proper determination of the same matter in the court proceedings. Again, nothing of that kind is suggested in this case where, as Pincus J.A. points out, the parties to the proceedings are not the same and the hearing will be conducted in private. -- 4 of 17 -- 5 In any event, the Court has ample power to stay other proceedings of that kind, although it is a jurisdiction exercisable only with great caution where, as here, the other tribunal is properly seized of the matter before it: Stannard v. Vestry of St. Giles, Camberwell (1882) 20 Ch.D. 190, at 196; Grand Junction Waterworks Co. v. Hampton Urban District Council [1898] 2 Ch. 331, at 345-346. The very existence of a jurisdiction to stay tends to confirm that it is not automatically a contempt of court for an inferior court or tribunal to inquire into a matter that is also being litigated in the Supreme Court. Finally, the proposition was advanced that the arbitration proceedings were liable to be used to conduct a “dress rehearsal” of the cross-examination that would take place in the Supreme Court action. However, individuals are often required in the same or different proceedings to give evidence and submit to cross-examination more than once about the same matters or events. The general expectation is that they will give the same or similar testimony on all occasions. If they do not, it is regarded as affecting their credit or credibility; but that is no reason for supposing that a witness is entitled to be protected from being asked or having to answer on oath the same question more than once in the same or separate proceedings. If that were so, it would be futile on appeal to order a new trial, and equally wrong to order that separate issues, as to which a witness might be asked the same questions, should be severed and tried separately. I agree with the orders proposed by Pincus J.A. -- 5 of 17 -- 6 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 7677 of 1996. Brisbane Before McPherson J.A. Pincus J.A. Derrington J. [Holiday Villages v. Devine Erby Mazlin & Ors.] BETWEEN: HOLIDAY VILLAGES (AUSTRALIA) PTY LTD (Respondent) Appellant AND: DEVINE ERBY MAZLIN (QLD) PTY LTD, HAYSOM GROUP ARCHITECTS PTY LTD, JOHN FOWELL, CHRIS EVERDING, MALCOLM MIDDLETON and ED HAYSOM (Applicants) Respondents REASONS FOR JUDGMENT - PINCUS J.A. Judgment delivered 19 November 1996 This is an appeal from an order of a judge of the Supreme Court setting aside subpoenas issued to four people ("the witnesses") out of the Supreme Court of New South Wales, in relation to an arbitration in that State. There are two proceedings on foot, the issues in which overlap, and both relate to construction and other work done by Thiess Contractors Pty Ltd ("the contractor") at the Club Med resort on Lindeman Island. One of the proceedings is an arbitration in which the contractor seeks to recover from the appellant ("the principal") monies due under the building contract, as well as damages under the Trade Practices Act 1974 (Commonwealth) and otherwise; I shall call the damages claim the "misleading conduct claim". The other proceeding is an action out of the Supreme Court of Queensland brought by the contractor, against the principal and others, seeking damages under the misleading -- 6 of 17 -- 3 conduct claim. So far as it concerns the principal, the issues in the misleading conduct claim are the same in the action and in the arbitration. The defendants in that action, apart from the principal, include the two corporate respondents in this Court, as well as three other companies. The witnesses are not parties to either proceeding; they are respondents here together with the two corporate respondents. The Supreme Court of Queensland entertained the application to set subpoenas aside under the Jurisdiction of Courts (Cross-Vesting) Act 1987 of the State of New South Wales, and the appellant principal does not contend that the matter was beyond the Court’s jurisdiction. The subpoenas which were set aside were argued below, and here, to present a risk of undue interference with the course of justice in the proceedings in the Supreme Court of Queensland; the primary judge, accepting that argument, expressed the view that, if complied with, the subpoenas would enable the contractor and the principal to conduct a "dress rehearsal", in the arbitration, of the misleading conduct claim. The primary judge also referred to the question of notice, the width of the subpoenas issued and the absence of proper tender, as possibly rendering enforcement of the subpoenas oppressive or vexatious; his Honour said that he proceeded on the basis that those difficulties could be overcome. They were not raised before us and I say no more about them. That is, the only question before us is whether the judge was right in setting aside the subpoenas as being calculated to interfere with the proper disposition of the litigation in the Supreme Court of Queensland to which I have referred. In essence, the issue in the case is whether the disadvantage to which the respondents are subject, if the arbitration proceeds and the subpoenas are allowed to stand, is such as to -- 7 of 17 -- 4 make the issue of the subpoenas a contempt of the Supreme Court of Queensland. For reasons I shall explain, I reject that proposition; but it is first necessary to set out the facts in rather more detail. The respondents include two companies described in the material as joint venture architects; they were appointed superintendents under the building contract. Two others of the respondents, Messrs Middleton and Haysom, are managing directors of those companies and the remaining two individuals, Messrs Fowell and Everding, were the representatives on site of the superintendent; these four men are the witnesses who have been subpoenaed. On 31 May 1994 the contractor issued out of the Supreme Court of Queensland the writ referred to above, against the principal and five other parties. Those five were the two companies just referred to, being superintendents under the contract, another company which was the project manager, another which was the quantity surveyor and another which was the engineer. The claims made in the endorsement on the writ were not the same against all defendants, but speaking generally, what was claimed was damages for misleading conduct and the like, as well as damages for negligence or misleading statements in connection with certain documents and information relating to the construction work. Among the misleading documents complained of were the tender documents and other pre-contract documents, as well as the bill of quantities. That writ was not served, in the first instance. Ten months later, by an order of Giles CJ Comm.D. in the Supreme Court of New South Wales (31 March 1995), a Mr Easton was appointed arbitrator in respect of claims made by the contractor against the principal in relation to the work done on the Lindeman Island resort; the contract contained, as is usual, a clause providing for resolution of disputes under it by means of arbitration. On 29 May 1995 the contractor served its writ on the two companies who were the superintendents under the -- 8 of 17 -- 5 contract and are two of the respondents. At that time the contractor said, in effect, that it proposed that the litigation begun by the writ would not, for the time being, proceed. In August 1995 points of claim were delivered by the contractor in the arbitration; the principal delivered a cross-claim. Then in December 1995, on application by the principal, the arbitrator extended the ambit of the arbitration to include the matters set out in the writ, so far as they related to claims against the principal. On 25 July 1996 it was ordered in the Supreme Court of Queensland that the contractor deliver a statement of claim, by 27 September 1996. The subpoenas in question were issued by the Supreme Court of New South Wales on 21 August 1996, the arbitration being scheduled to commence 19 days later. The order setting aside subpoenas, which order is presently in question, was made on 9 September 1996. Those subpoenas, I reiterate, were directed to four people connected with the work on Lindeman Island, none of whom is a party either to the action or the arbitration. In the reasons given below for the order which the judge made, his Honour referred, as a "consideration of some relevance", to the fact that when the scope of the arbitration was extended, the misleading conduct allegations "came into issue in the arbitration in a way in which they previously had not, assuming them to have previously been in issue at all". His Honour also said that there was the prospect that in the arbitration the parties would be able to conduct a "dress rehearsal" of the misleading conduct claim and to the fact that there were issues of credibility to be determined. His Honour pointed out that the respondents were not parties to the arbitration proceedings and would not be represented before the arbitrator. The view taken was that the opportunity for a "dress rehearsal" might be used to the advantage of both parties to the arbitration and potentially to the detriment of the respondents. With regard to the latter suggestion, the respondents consist of two companies which are parties in the action, and four individuals, the witnesses, who are not in either action or arbitration. The -- 9 of 17 -- 6 detriment feared might, as to the witnesses, have been thought to be the possibility that they might ultimately be sued in relation to the misleading conduct claim, for contribution or indemnity, or perhaps that their reputations might be damaged. Counsel were unable to refer us to any reported case in which subpoenas issued for attendance at an arbitration proceeding were held to be in contempt of court on the ground that attendance pursuant to them would interfere with proceedings pending in court. But Mr Donohoe QC, who led Mr McKenna for the respondents, relied, as a decision in an analogous situation, on that of the Full Court of the Federal Court in The Sentry Corporation v. Peat Marwick Mitchell & Co. and Ors. (1990) 24 F.C.R. 463. There, as here, there were two sets of proceedings in which the issues overlapped; in the Sentry case, one was in the Federal Court of Australia and the other in the Wisconsin Circuit Court. The latter Court made an order requiring Peat Marwick Mitchell & Co. to allow depositions to be taken in Australia, for the purposes of the Wisconsin proceedings, from a number of people. But that process was restrained by the Federal Court on a basis which sufficiently appears from the reasons of Lockhart J.; his Honour held that there was a real risk that the evidence to be given by the persons in question in Australia might touch issues in the Federal Court case. His Honour accepted that the proposed taking of depositions imposed a "real risk of interference with the Australian proceedings". It is not, I confess, absolutely clear to me what sort of interference his Honour thought was to be apprehended. There is not to be derived from the Sentry case, in my respectful opinion, any principle which assists the respondents here; it appears that the Federal Court merely attempted to apply to the matter before it statements of principle from Victoria v. Australian Building Construction Employees and Builders’ Labourers Federation (1982) 152 C.L.R. 25 at 56, 60 ("the BLF case"). -- 10 of 17 -- 7 In summary, what was held in that case was that there was a contempt of court of the relevant kind only if there was either actual interference with the administration of justice or a "real and definite tendency to prejudice or embarrass pending proceedings". The expression just quoted was taken from the earlier decision of the High Court, in John Fairfax & Sons Pty Ltd v. McRae (1955) 93 C.L.R. 351 at 372; that concerned a publication in a newspaper said to be likely to embarrass a pending criminal proceeding. The BLF case concerned the question whether the activities of a Royal Commission looking into a trade union were likely to interfere with Federal Court proceedings in which the cancellation of the registration of the union was sought. We were also referred to other authorities dealing with the question whether an administrative inquiry might properly go ahead with a process of investigating issues in pending litigation; they appear to me to involve different considerations from those which apply where the clash is between the requirements of two concurrent pieces of litigation. Mr Donohoe did not suggest that the fact that one of the proceedings in the present case is an arbitration rather than an action makes a difference; he contended, as I understood him, that the same principles would apply if the two competing proceedings were in courts - indeed, if they were both in the same court. As to that, I admit to finding the notion that the issue of a subpoena in one action in the Supreme Court of Queensland might be a contempt, as interfering with the determination of another action in that Court, to be an improbable one. But it is unnecessary to pursue that and enough to note that, as I have explained, it is no part of the respondents' argument that the circumstance that the New South Wales proceeding is an arbitration rather than a court proceeding gives the respondents any additional ground for complaint. One reason for this may be that one of the two main bases on which contempt has been thought to exist, in comparable situations, is the risk of adverse consequences flowing from -- 11 of 17 -- 8 publicity; this is explained in the dissenting judgment of Brennan J. (as his Honour then was) in the BLF case at 168,169. The adverse consequences of pre-trial publicity of the kind in question, there identified, were "usurpation" of the court's function; a tendency to make the court have in mind the facts proved in the inquiry, or not to be free from bias (presumably bias derived from its knowledge of those facts); and undermining of public confidence. None of these consequences would be likely to ensue from an arbitration, held in private. The second of the two main bases for contempt findings, in this field, has to do with the privilege against self- incrimination, not relied on here. Mr Donohoe disclaimed any contention that, whenever issues in two proceedings substantially overlap, it is a contempt to issue subpoenas, in the proceeding being heard earlier, to witnesses to be called in relation to the overlapping issues. Mr Donohoe contended that there were special features in the present case, which made what might otherwise have been lawful, a contempt. He said that one feature which made the case special was that issues of credit might well arise; that cannot be a special feature. He also pointed out that in its initial form the arbitration did not involve any reference to the misleading conduct claim; as I have explained, that claim became part of the arbitration by a subsequent order. It is unclear to me why this makes any substantial difference. It is my opinion that if it is right that pursuit, by compulsory process, of the issues involved in arbitration of the misleading conduct claim was a contempt of the Supreme Court of Queensland, it would have been a contempt even if those issues had been raised in the arbitration in the first place; the extent of conflict with the exercise of jurisdiction by the Supreme Court of Queensland is not augmented by the circumstance that the misleading conduct claim was not initially part of the arbitration. Of course, it is on the face of it undesirable that the contractor should be forced to pursue -- 12 of 17 -- 9 two related causes of action against the principal, as to the rights it may have to recover monies in respect of the Lindeman Island work, in two separate proceedings. No doubt it was for that reason that the contractor was content to have the misleading conduct claim included in the issues to be arbitrated. If the witnesses subpoenaed are not to give evidence in the arbitration, it seems likely that the contractor, which is not a party to this appeal, will have to pursue both arbitration and the action, consecutively. Mr Donohoe did not submit that the addition of the misleading conduct claim to the arbitration was done with the intention of interfering with the Supreme Court action; there was no evidence, nor any finding, which could have supported such a submission. In my opinion the essence of the respondents' case is simply that they will incur such a disadvantage, because of the relationship between the arbitration and the action, that steps to pursue the former, insofar as they involve the calling of the witnesses to whom I have referred, are a contempt of court. The disadvantage relied on is in substance that mentioned by the primary judge, that there could be a "dress rehearsal" in relation to the evidence of the witnesses: examination and cross-examination in relation to precisely the same factual questions as would be canvassed if they were to supply evidence in the action. It commonly happens that the same or similar issues are or seem likely to be involved in two successive proceedings; the most familiar example is the criminal jury trial following on a committal. Whenever a misleading conduct claim, or for that matter a claim asserting misrepresentation under the general law, is brought against a principal - for example the vendor of a business - without joining the person alleged to have made, on behalf of the principal, the misleading statement or misrepresentation complained of, the same position may arise as in the present case. That is, the agent, although not joined in the action, faces the prospect that he -- 13 of 17 -- 10 or she may well be examined and cross-examined on an issue which will arise if and when the action against the principal succeeds and a suit is brought to recover indemnity from the agent. The agent might be able to avoid this situation, if it is found not to be to his or her taste, by attempting so to arrange matters that the question whether the principal is entitled to indemnity is determined at the same hearing as that in which the claim against the principal is heard. But one could understand the agent preferring not to take that course; by becoming a party to the action against the principal the agent may be liable for legal costs which might otherwise not be incurred; many an agent might prefer to let the action against the principal proceed and await events. If that action fails, the agent would no longer be troubled by the matter. That is so in the present case; if the misleading conduct claim against the principal fails before the arbitrator, it cannot be relitigated in the action. Mr Donohoe laid emphasis, as a disadvantage of the present situation, on the fact that, as he assumed, the witnesses in the present case could not by any means be represented at the arbitration hearing and so would not have the protection of their own counsel. If the assumption is right, that appears to me to weigh only slightly in the balance, in favour of the respondents, for there is no particular reason to think that the content of the evidence of the relevant witnesses would vary, depending on whether or not they happened to be represented. Further, the witnesses would not necessarily be represented in the action, not being parties. It must not, in my opinion, be overlooked that what is in issue is an allegation of contempt of court. A court will not lightly hold that the pursuit, in good faith and with no improper motive, of the ordinary procedure in conduct of an arbitration, or a piece of litigation, constitutes contempt. The proposition that contempt is a serious matter is illustrated by Witham -- 14 of 17 -- 11 v. Holloway (1995) 183 C.L.R. 525. In the principal judgment one finds: "In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or a breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice." (530) In the present case, it is a contempt of the latter variety - criminal contempt - which is in issue; the respondents' submission is that the subpoenas constituted such a contempt of court. In Witham v. Holloway the judges said that the distinction between civil and criminal contempt was based in significant respects on illusory differences. The reasons went on: "Rather, the illusory nature of those differences and the fact that the usual outcome of successful proceedings is punishment . . . make it clear . . . that all proceedings for contempt ‘must realistically be seen as criminal in nature’ . . . the consequence is that all charges of contempt must be proved beyond reasonable doubt." (534) Mr Donohoe assures us that the corporate respondents would prefer the misleading conduct claim to be determined in an action in the Supreme Court of Queensland because they are parties to it; their preference cannot convert what has been done into a contempt of court. No doubt there may be potential disadvantages, from the point of view of the corporate respondents, in the pursuit of the arbitration in advance of the action; on the other hand, the situation which they face, namely that if the misleading conduct claim succeeds against the principal it is likely that the principal will later sue them for indemnity, is not one which is unprecedented or even unusual. It is not a situation which all parties similarly placed would necessarily regard as disadvantageous. It appears that there is little authority of direct assistance on the question when or whether contempt may be committed by forcing the attendance of witnesses in an action or arbitration, when the issues on which they are called arise also in another action, to be heard -- 15 of 17 -- 12 later. I have suggested that this question is to be distinguished from that which arises when the earlier proceedings consist in an executive or administrative inquiry and the later is a court proceeding. It is unnecessary here to attempt to define comprehensively the extent to which the law of contempt may inhibit the process of obtaining evidence in the former situation - where the clash is between an earlier action or arbitration, and a later action. Whatever the true rule may be, it can have little, if any application, absent any improper motive, where the witnesses subpoenaed are parties to neither proceeding, as here. I reject the proposition that it is a contempt to subpoena a witness to give evidence in action A, merely because the witness is likely to be required to testify in later action B on the same issue, and also the proposition that this becomes a contempt if the relevant issue is raised in action A by amendment, or if A is an arbitration rather than an action. In my opinion the pursuit, in good faith, of the issues properly raised in the arbitration, by subpoenaing witnesses, was not a contempt. If there is no contempt, but some injustice or great inconvenience may ensue from enforcing compliance with a subpoena, it may in appropriate circumstances, be set aside as oppressive: Raymond v. Tapson (1882) 22 Ch.D. 430. I would allow the appeal with costs, set aside orders nos. 1 and 3 made below on 9 September 1996, and in lieu order that the application to set aside the subpoenas mentioned in order no. 1 be dismissed with costs. -- 16 of 17 -- 13 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 7677 of 1996 Brisbane Before McPherson JA Pincus JA Derrington J [Holiday Villages v. Devine Erby Mazlin & Ors.] BETWEEN: HOLIDAY VILLAGE (AUSTRALIA) PTY LTD (Respondent) Appellant AND: DEVINE ERBY MAZLIN (QLD) PTY LTD, HAYSOM GROUP ARCHITECTS PTY LTD, JOHN FOWELL, CHRIS EVERDING, MALCOLM MIDDLETON and ED HAYSOM (Applicants) Respondents REASONS FOR JUDGMENT - DERRINGTON J Judgment delivered 19 November 1996 I agree with the judgments of McPherson JA and Pincus JA -- 17 of 17 --