Australian Court Paves Way for Evidence to be Taken in Australia in US Proceedings Involving Breach of the Sherman Act
By Kathryn Edghill, Partner
22 May 2007
In a recent decision (Sykes v Richardson [2007] NSWSC 418) the Supreme Court of New South Wales held that a witness could be compelled to give evidence in Australia for use in civil proceedings in the United States involving alleged breaches of the Sherman Act. The case has ramifications not only for potential witnesses residing or located in Australia but also for plaintiffs and defendants in US proceedings and their counsel who seek to obtain or challenge such evidence being given.
In New South Wales the taking of evidence for foreign courts is governed by the Evidence on Commission Act 1995. Section 32 of that Act provides for the making of applications to the New South Wales Supreme Court (the superior court of record in that State). Section 32(2) provides, however, that applications do not lie "in respect of proceedings relating to the commission of an offence or an alleged offence unless the requesting court is a court of a place in Australia or of New Zealand". The question which the Court had to determine in Sykes case was whether proceedings commenced in Wisconsin in which a claim was made for treble damages arising out of an alleged "continuing combination, conspiracy and agreement to manipulate and fix, raise and maintain prices of physical copper" were proceedings relating to the commission of an offence or an alleged offence.
It was common ground that the allegations of breach of the Sherman Act carried with them potential criminal liability. It was also common ground that the plaintiffs in the US proceedings were private parties who did not, and could not represent the State, nor institute criminal proceedings, nor did they or could they seek fines against or imprisonment of the defendants.
The Court heard vigorous argument from opposing counsel, however, on the importance of the phrase "relating to the commission of an offence or an alleged offence". Counsel for Ms Sykes, the potential witness, argued that the Court could not grant the application of Mr Richardson (the plaintiffs' counsel in the Wisconsin proceedings) because, even though the proceedings were civil in nature, they still related to a criminal offence which was borne out by the punitive nature of the claim for treble damages. Counsel for Mr Richardson argued that the exception in section 32 only applied to criminal proceedings which had as their focus the determination of whether an offence had been committed and, if so, the appropriate punishment to be awarded. The Court accepted Mr Richardson's argument, relying on an English case from 1893 (Huntington v Attrill [1893] AC 150) in which it was held that a similar exception applied only to public proceedings in the nature of a suit in favour of the State whose law has been infringed. Consistent with the requirement of comity that a letter of request issued by a foreign court for the purpose of civil proceedings before it be viewed benevolently, the Court held that section 32 of the Evidence on Commission Act did not prevent the grant of an application to take evidence on commission for the Wisconsin proceedings.
The case confirms the approach of Australian courts to the taking of evidence for foreign courts and highlights the tensions for witnesses in civil suits involving antitrust matters whose evidence may also incriminate them in commission of a criminal offence. While the witness may be compellable from an Australian law perspective, issues relating to privilege from self-incrimination will still arise at the time the evidence is given. Given the current lack of criminality for most breaches of Australian antitrust law, the need to address such issues in this context may not be at the forefront of the Court's or practitioners' minds and the case is a timely reminder to such witnesses and their Australian and US counsel of the need to be attuned to such issues.