In the recent Supreme Court of Victoria decision, Pathway Investments Pty Ltd v National Australia Bank Limited (No. 2) [2012] VSC 495 (Pagone J), the defendant successfully restrained the plaintiffs from adopting US procedure to depose individuals located in New York.

The individuals sought to be questioned by the plaintiffs for the purposes of the Victorian class action included current and former employees of the defendant (NAB), as well as Ernst & Young and KPMG.

Background

On 28 September 2012 the plaintiffs obtained orders from the United States District Court, Southern District of New York to conduct discovery for use in a foreign proceeding (namely, the class action commenced in the Supreme Court of Victoria).

The United States District Judge ordered that seven named individuals located in New York show cause on 7 November 2012 as to why orders should not be issued pursuant to the Federal Rules of Civil Procedure and the Rules of the New York Court, among other things, authorising the plaintiffs to take discovery from the proposed deponents for use in the Victorian class action by issuing and serving subpoenas on each of the proposed deponents for examination by oral questions.

This form of taking oral evidence before trial is not available under any rule of civil procedure in Australia.

Issue for the Supreme Court of Victoria

The defendant applied to the Supreme Court of Victoria for an anti-suit injunction to restrain the plaintiffs from pursuing or participating in the New York proceeding, including the proposed depositions.

The question for the Court was whether the plaintiffs’ use of a process that was otherwise lawfully available to it would have had an impermissible tendency to interfere with the Victorian proceeding.

Defendant’s application for anti-suit injunction successful

Pagone J accepted the defendant’s submission that the institution of the New York proceeding, in express aid of the plaintiffs’ case in the Victorian class action, interfered with the due process of the Court in a way that was vexatious or oppressive.

The submissions for the defendant relied upon three reasons, which his Honour accepted:

  1. The plaintiffs, in adopting the New York procedure to aid their case in the Supreme Court of Victoria, had bypassed the supervision of the Supreme Court of Victoria in a case managed list;
  2. To permit the New York proceeding to continue would materially prejudice the defendant by disrupting its trial preparation and create procedural distortion in circumstances where the defendant was subject to the United States process but the plaintiffs were not; and
  3. There was no unfairness in restraining the plaintiffs.

Taking of evidence overseas – where to from here?

Pagone J referred to previous decisions in which it was observed that whether conduct is to be regarded as vexatious or oppressive in a particular case is “always a question of fact”. The facts in the present case satisfied Pagone J that the degree of interference of the proposed procedure in New York on the process of the Supreme Court of Victoria “in this case occasioned at this time” in the context of a case managed by the Court was vexatious and oppressive.

Following this decision, there may remain some scope for plaintiffs’ legal representatives to attempt to adopt overseas procedure to aid class actions commenced in Australia. In particular:

  • The timing of the proposed depositions was relevant to Pagone J’s decision to restrain the plaintiffs. The proposed depositions in New York would have likely taken place immediately before or during the trial in Victoria; and
  • Pagone J did not express a view on whether an order made against the plaintiffs would prevent another person, such as a group member in the class action, seeking to invoke the deposition process.

The full decision may be viewed here.