IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)
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CIVIL CASE No.44 of 1998
BETWEEN:
Dr. M. KAZACOS
an>C/- Juris Ozols & Associates,ates,
1st Floor Lolam House, Port-Vila
Plaintiff
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AND:
PACIFIC INTERNATIONAL TRUST COMPANY LIMITED
of International Buil Building, Kumul Highway,
Port-Vila, Vanuatu
Defendant
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Coram: Chief Justice Lunabek
Counsel: MesRichard Andrew Parsons and Juris Ozols
for the Plaintlaintiff
Mr. Garry Blake for the Defendant
JNT
1. p;&nssp; INTRODU
>
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The plaintiff, Dr Michael Kazacos, is an Australian
citizen resident in Queensland, Australia. The defendant, Pacific
International Trust Company, (“PITCO”) is a company incorporated in Vanuatu,
and carrying on business in Vanuatu. By Amended
Summons filed on 28 July
1999, the Plaintiff claimed for:
1. style="font:7.0pt "Times New Roman"">   &nbssp;&nnbp; &nsp; &nbbp;&nnbsp; &nbbsp;
Anan>An order that the defendant provide further and better discovery and
in particular thatiscovspan>
(a) &nbs; &nbbsp;&&nbp; &nsp; &nbbp;&nnbp;& &nb alan>all corr correspondence and other documents passing between the defendant
d itsraliaicitod barrs inect of the matters for
which the defendant isnt is seek seeking ring reimbueimbursemersement frnt from the Plaintiff in respect
of the fees
of such Australian solicitors and/or barristers;
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1">
(b) nbsp; p; &nbp; &nbssp;
pan>all corr correspondspondence and documents passing between the defendant and
ttioname
Auty inect o plai;
(c) ;&nspp;&nssp; p; &nbp; &nbp;
(d)   &nbssp;&nnbp; &nsp; &nbbp;&nnbsp;
all documents ents relating to the work performed by the defendant’s
Australian solicitors and barristers in respect of the
matters for which the
dant ekingbursement from the plae plaintifintiff in f in respect of the fees
of such Australian
solicitors and/or barristers.
2. &nnsp;&&nsp;;&nspp;&nssp;&nsp; p;
s For ther the avoidance of doubt the Court hereby makes a further order
that the prohibitions on release of information contained
in Parts 3 and
3(a) of the Orders ofCourt on 1ruary, 1997 1997 and 2and 24 Feb4 February ,
1998 in Civil Case No.8, 12
and 13 of 1997 are hereby discharged and both
the plaintiff and the defendant are at liberty to disclose any such
information
pursuant to the laws of Vanuatu.
3. nbsp; p; ; &nbbp; &nbp; &nbs; p;
That that the defendant provide copies of any documents inspected without
imposition of any conditions as to non removal of
documents subject to both
parties giundergs thpies of any any documdocuments ents obtained from the
other party by way
of discovery in these proceedings will not be used for
any purposes other than Civil Case No.44 of 1998.
4. &bsp; ; &nbbp;&nnbsp;&nsp; &nbp; &nbssp; &&nsp;;&nsp;
An ordet that the amount of AUD105,000 paid into Court by the
defenon 13ber, be pat to laintiff.
>
5. &nsp; & &nbbsp; &nbp; &nbp; &nbbp;&nnbsp;
Such further oher or other orders as the Court deems fit.
1">
&nbs> &nbbsp; &nsp; &nbbp;&nnbp;& &nbbsp; &nbp;
p;
Cos be cobe costs in the cause.
The defence in reply filed a Summons dated 2 August 1999
seeking for the following relief:
1. &nnsp;&&nsp;;&nspp;&nssp;&nsp;   That by reasoreason of the operation of the National Crime Authority Act
1984 (Commonwealth of Australia) (“NC”) intion e defendant
its servants and agentilure to discover any documencuments thts the dise disclosuclosure of
which is prohibited by the
NCA Act constitutes a reasonable excuse for
failing to discover such documents.
2. &nbs; &nbbsp;&&nbp; &nsp; &nbbp;&nnbp;& &nbbsp;
p;
That copies of any documents obtained from the defendant by f
scove thesceediot be for any purposes other that Civil
Case
No.44No.44 of 1 of 1998.<998.
>
3. &nnsp;&&nsp;;&nspp;&nssp;&nsp; p;&nssp;
Tpan>That no copies of any documents obtained fromDefenby wa
overyemoved from the jurisdiction of the Supreme Court ourt of Vanf
Vanuatu.uatu.
4.&nbs> &nbbsp; &nsp; &nbbp;&nnbp;& &nbbsp; &nbp;
p;
Tha plainplaintiff’s Summons dated 11 December 1998, anded Ss dat July be dsed.
5. nbsp; &nbbp;&nnbp;& &nbbsp; &nbp; &nbp;
pan>That tai plaintiff tiff pay the defendant’s costs of and in connection
with this Summons.
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1">
6. &bsp; ; &nbbp;&nnbsp;&nsp; &nbp; &nbssp; &&nsp;;&nsp;
Such fu oher or other order as the Court deems fit.
&GB"> nbsp;
2. &nbbsp;&&bsp;; bspEF RICTS
The plaintiff opened an account with the defendant
entitled “Society Nominee Account” and other accounts. Sometime after
opening these accounts, the plaintiff was charged with tax fraud in
Australia and during the investigation, the Australian
National Crime
Authority inquired into the plaintiff’s accounts with the defendant.
Meanwhile, in Vanuatu, the Attorney
General brought proceedings under the
Serious Offences (Confiscation of Proceeds) Act against Dr Kazacos and
his former wife both of who held these accounts with PITCO. In those
proceedings, the Supreme Court
of Vanuatu ordered that the funds in “Society
Nominee Account” and the other accounts be frozen on 17 February 1997. This
order was subsequently lifted when the National Crime Authority in Australia
revealed that the funds in the accounts were
not the proceeds of crime. The
plaintiff was convicted of tax fraud in Australia, fined and jailed. After
his conviction,
the National Crime Authority in Australia stated that their
interest in the plaintiff was finished.
Early in 1998, the plaintiff directed the defendant to
remit the funds upon their release to himself and his former wife, and
requested a detailed statement from the defendant of all interest and
charges applied to his account. The defendant remitted
the balance of the
funds to the plaintiff after it had deducted AUD119, 984 for its costs, and
also AUD105,000 to be
held on account of future costs. During these present
proceedings, this court ruled that the AUD105, 000 held by the defendant
on
behalf of the plaintiff for future expenses be paid into the Supreme Court
of Vanuatu Trust Fund and this was duly
complied with.
3. &nbssp; THE PRINGan>
During the course of these proceedings, the character of
the issues has changed considerably. Initially the dominant issues
related
to the agreements between the parties as to costs charged, how these costs
came about, and whether the defendant
was entitled to withhold funds for
future expenses. However, as the matter progressed, the ancillary issue of
discovery
of documents appeared to gain importance through a series of
summonses filed with this Court. Simply put, the defendant refused
to
discover documents between the staff of the defendant and the defendant’s
lawyers in Australia on the basis that Australian
law prohibits the
disclosure of any dealings with the National Crime Authority. These
Australian lawyers were hired by
the defendant to deal with demands placed
on employees of the defendant who, while they were in Australia, were
approached
by the Australian National Crime Authority which was
investigating the plaintiff’s accounts.
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4. &nbssp; &nsp; SUBMISSIFNS O PARTIES
4.1 &nnbsp;Plhe tifins Su’missimissions
span "EN-GB">
The plaintiff submitted that in its affidavit of
documents, the defendant has not specifically listed documents, or the
categories of the documents over which it is claiming privilege. The
plaintiff further submitted that while the Australian
National Crime
Authority Act 1984 contains provisions dealing with disclosure relating
to summonses issued by the National Crime Authority, these provisions
do not
determine the defendant’s obligations to give discovery in proceedings in
Vanuatu. The plaintiff submitted that
the defendant is claiming privilege
against self-incrimination under the laws of Australia, however in
Brannigan v Davison
, the Privy Council held that no such
privilege applies where a prosecution would flow from the law of a foreign
country.
The plaintiff further submitted that it is significant that the
defendant has given discovery of a substantial number of documents,
disclosure of which apparently breached the Australian Act.
The plaintiff submitted that the contentious documents
are discoverable as the the means by which the trhe trustee’s claim of
entitlement to take trust moneys can be tested. These are undetailed bills
for approximately AUD65,000 from the Defendant’s
Australian solicitors and
as well as the undetailed work performed by the defendant which has been
claimed at AUD49,984.
The plaintiff submitted that the defendant is a trust
company and holds the plaintiff’s money as a trustee, and therefore is
obliged to account to the plaintiff for its dealings with the plaintiff’s
money. The plaintiff further submitted that
the defendant is subject to the
ordinary trustee’s obligations to provide information, and any proper
account by the
defendant must involve full disclosure of the details of
expenditure, especially where scope exists, as it does in this matter,
for a
conflict of duty and interest to arise.
The plaintiff submitted that in certain circumstances, if
a court has exercised its proper discretion and declined to compel
a person
claiming privilege to make an incriminating disclosure, the remedy granted
will be on the basis that the disclosure
had not been made. There is no
statutory context in this case for discretionary relief as far as its
obligation to provide
discovery, however if the defendant wants a weighing
up in favour of its contentions, then it must be prepared to accept the
consequences. The plaintiff cited ASC v Bank Leumi Le-Israel (Switzerland)
and Others
in support.
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The plaintiff submitted that by analogy to Order 33, Rule
21, the connces in this case should beld be that the defendant not
be able
to claim the amount for its Australian lawyers, and also the amount claimed
by the defendant’s staff. The plaintiff
submitted that the court should
strike out the defendant’s defence where it resists payment by the defendant
of AUD115,000
and order payment of the amount to the plaintiff.
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The plaintiff submitted that as a trustee, the defendant
is obliged to comply with the instructions of the beneficiary, which
in this
instance was to close the account and forward the proceeds to the
beneficiary.
4.2 & p; Tse Defe Defendantndant’s Submissions
The defendant submitted that it is well estaed in
the authorities that communications between a cn a client and his legal advisers
are privileged from production. The defendant cited Wheeler v Le Merchant
and
Anderson v Bank of British Columbia
in
support.
The defendant submitted that, for unclear reasons, it is
only discovery of the communications with legal advisors in Australia
which
the plaintiff seeks, and not legal advisors in Vanuatu. The defendant
submitted that all communication with the
lawyer is privileged regardless of
which jurisdiction, and that it is only important that there be a
relationship of
lawyer and client as between the party claiming the
privilege and the advisor. The defendant cited Great Atlantic Insurance
Company v Home Insurance Co.
in support.
The defendant submitted the account opening form refers
t principal, here the plaintlaintiff, being responsible for all charges
or
liabilities incurred by the defendant in connection with the account.
However, the form does not refer to a review
of the advice sought from legal
representatives by the defendant. The defendant further submitted that this
situation
could be analogous to a situation where a bank must enforce a
security, and it would not be open for the customer to seek discovery
of the
bank’s correspondence with its lawyers in connection with the enforcement
while the customer was disputing a claim
by the bank for reimbursements of
costs of enforcement. The defendant submitted that if the costs were to be
taxed, the
authority of Pamplin v Express Newspapers Ltd
indicates that a party contesting a taxation does not have a right of
access to the other party’s otherwise privileged documents.
The defendant
further submitted that in this matter, the defendant has discovered
documents which reflect the costs incurred
by the defendant.
The defendant submitted that cases such as Lillicrap v
Nader
and NGR Holding v Bacon & Woodrow
are distinguishable. The defendant submitted that the Lillicrap case
concerned proceedings brought by a plaintiff against his solicitor for
negligence in giving poor advice and is authority
for the proposition that
there is an implied waiver of privilege where proceedings are instituted
against the solicitor.
The defendant further submitted that if such a waiver
should apply to this matter, there would need to be an express provision
for
it in the terms of the agreement between the plaintiff and the defendant,
and there is not.
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The defendant submitted that implied waiver in
Lillicrap case discussed by the court in NGR Holding v Bacon &
Woodrow is limited to circumstances where the client sues his
solicitors.
Hans Heinrich Tsyssen-Bsen-Bornemisza v George Heinrich
Tsyssen-Bornemisza
where both of the above cases were
considered. The defendant distinguished this case where a claim of privilege
was rejected,
as in this present case it is the nature of dealings and the
circumstances giving rise to the instructions of lawyers and not
the
relationship between the defendant and his lawyers, nor the advice given,
which are in issue.
The defendant submitted that employees of the defendant
who have been approached by the National Crime Authority are prevented
from
disclosing information, including whether any documents exist, under the
Australian National Crime Authority Act. The defendant submitted that
therefore the defendant is reasonably excused from its failure to provide
discovery of any
documents if they exist relating to the National Crime
Authority investigation by the prohibition placed by Australian law.
The
defendant cites Brannigan v Davison
, Bank of Valletta PLC v National Crime
Authorities,
and The Canada Trust Company and Others v Wolfgang Atto Stolzenberg
and Others
as authority for the proposition that there is a weighing up exercise to
be carried out by a judge in determining whether a
party is bound to comply
with disclosure obligations under the domestic law when there is a sanction
under foreign law
for making this disclosure. The defendant further
submitted that disclosure would probably assist the defendant in this
matter, however one of the defendant’s employees concerned in this matter is
an Australian resident who intends to return
to Australia in the near future
and is concerned about possible prosecution in Australia if disclosure is
made in Vanuatu.
The defendant submitted that the setting aside of orders
made before the courtivil cases 8, 12 & 13 o 13 of 1997 has no
bearing on
the present matter.
In relation to documents discover Vanuatu
proceedings leaving the jurisdiction, the dehe defendant submitted that the
circumstances of this case are extreme and require further restrictions to
those implied undertakings for discovery which would
normally apply. The
defendant cited Format Communication v ITT (United Kingdom)
as authority. The defendant further
submitted that it is concerned that if documents regarding the National
Crime Authority
investigation leave Vanuatu, they would not be protected
from a search and seizure warrant. The defendant further submitted
that
evidence shows that the National Crime Authority may still be undertaking
some investigations where the defendant
is involved, and this has not been
able to be clarified during the hearing.
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The defendant submitted that to allow documents to leave
Vanuatu would put the defendant at a disadvantage as it would be possible
for the National Crime Authority to obtain these documents which it would
not otherwise be entitled to demand from the
defendant. To allow the
documents out of the jurisdiction would have the effect of assist the
National Crime Authority
in Australia, or at least have the risk of doing
so. The defendant further submitted that steps taken by the plaintiff to set
aside the confidentiality orders made in cases 8, 12 and 13 of 1997 raise
serious doubts as to the plaintiff’s intentions
in this matter.
The defendant submitted that the plaintiff has chose
sue before the courts of Vanuatu and has legal represepresentation here.
The
defendant further submitted that to ensure the sovereignty of the law of
Vanuatu must be maintained by the solicitors
from Vanuatu and also any
solicitors from Australia. The defendant submitted that Australian
authorities should use the
proper channels of mutual assistance legislation
if there are allegation of criminal conduct by the defendant, and not
circumvent these processes by using the Vanuatu courts.
The defendant submitted that regarding the AUD105, 000,
the plaintiff is not a resident of Vanuatu, and as far as it is aware,
has
no other assets. The defendant has made no application for security of costs
because of the deposit of that money
with the court, and no application has
been formally made by the defendant to seize those funds. The defendant
submitted
that because of the above, the application for the release of the
money is misconceived.
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5. &nbbsp; &nsp; COORT CERSIDONS>
The critical issue in this case is that the dant
refused to disclose documents between the staff taff of the defendant and the
defendant’s lawyers in Australia on the basis that Australian law prohibits
the disclosure of any dealings with the National
Crime Authority.
p>
DAT PORT-VILA, this 7th DAY of MAY,
2001
BY THE COURT
(Chief Justice)
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