RE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA

HEADNOTE

Letters rogatory. Evidence Ordinance. Ord. 70. S.G.R. Distinction between evidence required for trial purposes and what may be regarded as pre-trial discovery or a "fishing" expedition. Criteria to be adopted in determining this.

Held

Masters Order for evidence to be taken upheld subject to various items being excised.

______________

__________

JUDGMENT

__________

1. This is an application made by a Mr. Moreno & Companies he is connected with to set aside an Order made by Master O'Donnell for evidence to be taken pursuant to the provisions contained in Order 70 of the Rules of the Supreme Court. The original Applicant before the Master was the Crown Solicitor who had received letters Rogatory from the relevant authorities in the United States of America.

2. The evidence required by the request related to a Grand Jury investigation which is presently being conducted. The subject matter of the investigation is wide ranging and appears to relate to alleged fraudulent and or improper conduct by Mr. Moreno and his associated companies in connection with payments which have been made by the United States Military Authorities to the Philippine Government Authorities. For the purposes of this judgment it is not necessary for me to go into a great deal of detail as to what the alleged offences involved. The grounds put forward for setting aside the Masters Orders were as follows:

"1.	Contrary to Section 77B(1)(a) of the Evidence Ordinance, Chapter 8 the proceedings have not been nor are they likely to be instituted once evidence has been obtained.
2.	The proceedings are of a political character contrary to Section 77B(3) of the  Evidence Ordinance.
3.	The documents ordered to be produced may not be documents which a Court ought to order to be produced."

3. Having considered carefully the submissions made by Mr. Bell on behalf of the Applicants, I have come to the conclusion that there is merit only in the 3rd ground.

4. The notes in the White Book on Order 70/1/6/6 at p. 1072 set out in some detail the vital distinction between evidence which is required for a trial and evidence which is required for pre-trial purposes.

5. Put another way what is not permissible under the legislation is for the Court to make an Order the effect of which would be to enable the requesting party to have discovery of documents.

6. Clearly it is of importance to ascertain how the request is framed. On the one hand if specific reference is made to a particular document it is likely that what is being requested is the use of the document for evidential purposes at the trial. On the other hand, if the request refers to unspecified classes of documents it is much more likely that what is being asked for is discovery.

7. Lord Frazer at p. 332 of re Asbestos Insurance Coverage cases⁽¹⁾ sets out in his speech in some detail the tests to be adopted in determining whether a request is for particular documents or amounts to a fishing expedition. In his speech he considered the criteria previously adopted by Lord Wilberforce and Lord Diplock in RCA v. Rauland⁽²⁾. He says at p. 337 of the report:

"The meaning of the expression "particular documents specified in the order" in subsection (4)(b) was considered by several of the noble and learned lords who took part in the Westinghouse case⁽³⁾ decision. They were all emphatic that the expression should be given a strict construction. Having regard to the purpose of` subsection (4) which, as I have already mentioned, is to preclude pre-trial discovery, it is to be construed so as not to permit mere "fishing" expeditions. Lord Wilberforce said, at p. 609:

"These provisions, and especially the words 'particular documents specified in the order' (replacing 'documents to be mentioned in the order' in the [Foreign Tribunals Evidence Act] 1856) together with the expressed duty of the English court to decide that the documents are or are likely to be in the possession, custody or power of the person called upon to produce, show, in my opinion, that a strict attitude is to be taken by English courts in giving effect to foreign requests for the production of documents by non-party witnesses. They are, in the words of Lord Goddard C.J., not to countenance 'fishing' expeditions: Radio Corporation of America v. Rauland Corporation⁽²⁾."

"The requirements of subsection (4)(b), however, are not in my view satisfied by the specification of classes of documents. What is called for is the specification of 'particular documents' which I would construe as meaning individual documents separately described."

The second test of particular documents is that they must be actual documents, about which there is evidence which has satisfied the judge that they exists, or at least that they did exist, and that they are likely to be in the respondent's possession. Actual documents are to be contrasted with conjectural documents, which may or may not exist. In the Westinghouse case, I said, at p. 644:

"The reference to 'any' documents in the sweeping-up words in the schedule to the letters rogatory suggests to me that the draftsmen did not know whether such documents were in existence or not. Accordingly the words seem to be an attempt to circumvent paragraph (a) of section 2(4) of the Act of 1975, an attempt which should not be allowed to succeed."

"We would ask you specifically to remove from the renewal [a particular provision] as this is not in keeping with the umbrella form as now written. We look forward to hearing from you on this subject by cable as soon as possible, after the receipt of this memorandum.""

8. I accept that this is a most useful commentary upon the requirements which have to be met. It is necessary to consider in some detail the extent to which the United States Authorities have been able to meet this criteria. For this purposes it is necessary in my view to extract the relevant part of the letters rogatory, so that it can be seen precisely what material is being requested by the United States Authorities. The relevant part of the letters rogatory reads:

"1. Ordering the institutions set forth below to produce the documents 1/ relating to the hereinafter referenced accounts.

1/	"Documents" means any written or printed matter, microfiche, microfilm, or any electronic, mechanical or computer stored or produced records.

9. Such documents should include the following for each account covering the period January 1982 through and including December 1985:

Checking Accounts

A) Signature Cards

B) Monthly Account Statements for each month

C) Deposit Tickets

D) Withdrawal Items/Cancelled Checks

E) Deposited Items

F) Memorandum of Charges

G) Account Opening Applications

 

Savings Accounts

A) Signature Cards

B) Transcript of Account and Monthly Statements for each month

C) Deposit Tickets

D) Withdrawal Items

E) Withdrawal Slips

F) Deposited Items

G) Memorandum of Charges

H) Account Opening Applications

Other Checking, Savings, Time Deposit, Hold Mail or Any other type of Account or Transaction

A) Cashier Checks

B) Treasurer Checks

C) Money Orders

D) Irrevocable Letters of Credit

E) Applications and Agreements for Letters of Credit

F) Letters Confirming Letters of Credit

G) Documents in Compliance with Letters of Credit and Certifications Produced Authorizing Release of Letters of Credit

H) Cable Confirmations

I) Letters of Instruction

J) Letters from Raymond Moreno or Other Corporate Officers K) Hold Mail Agreements and Records

L) Mail Drop Agreements

M) Loan Records

N) Articles and/or certificates of Incorporation

O) Minutes of Meetings of the Board of Directors

P) Accounts Receivable Statements

Q) Correspondence Files

R) Standing Instructions Regarding All Accounts

S) Confirmation and/or Receipts of Financial or Security Transactions

T) Debit or Credit Memos

U) Tested Telexes

V) Cable or other Instructions on How to Proceed with Fund Transfer(s)

10. The banks, account numbers, and certain referenced transactions include:

a)	United Coconut Planters Bank of Hong Kong Acct# FCDU HMUBF - 1-573-S Location: Hong Kong Ref: AMWORLD, INC. 5/20/82 - amount $808,175.20
b)	CHEMICAL BANK BRANCH OFFICE HONG KONG Acct# Unknown Location: Hong Kong

Ref:	Transfer Fund from GTK Assets LTD. into AMORLD, INC. 4/19/84 $729,232.40 REF# 121000248 4/18/84 $300,000.00 4/18/84 $930,000.00

c)	CONTINENTAL BANK HONG KONG BRANCH OFFICE Acct# Unknown Location: Hong Kong

Ref:	Transfer Fund from GTK Assets LTD. into AMWORLD, INC. 4/18/84 $300,000.00 ref: 1254

d)	BARCLAYS BANK INTERNATIONAL LTD. HONG KONG Acct# 125-146-8440 Location: Hong Kong

Ref:	Wire Transfer Telecom Satellites of America, California 1st Bank Acct# 04-185838 Into Golden Assets LTD. Acct# 125-146-8440 on 9/17/84 Amount: $276,097.20.

e)	BANKERS TRUST COMPANY HONG KONG Acct# 04-039-762 Location: Hong Kong

Ref:	Wire Transfer Acct# 009-169 Bank of Philippine Islands to Acct# 04-039-762 Bankers Trust Co. Hong Kong through Bankers Trust Co. New York 5/23/83 Amount: $291,885.54

f)	BANKERS TRUST COMPANY HONG KONG Raymond Moreno or Ray Moreno Time Deposits (Dec. 1982 through August 1983) Reference Numbers:             ZM 8564; ZM 9287; ZM 9637;             ZM 10059; ZM 100395;             ZM 10938; COT 0094;             COT 0260; COT 0409 Location: Hon Kong
g)	BANKERS TRUST COMPANY HONG KONG Letter of Credit Acct# 040680012 Letter of Credit for Electronic Specialists, Incl. (ESI); Letter of Credit # 20626 I Location: Hong Kong
h)	BANKERS TRUST COMPANY HONG KONG Hold Mail Custodian Account of Geomanagement, LTD; Hold Mail Custodian Account of Northam Elecommunications Systems Engineering, LTD."

11. At first sight it would appear that the United States Authorities have cast their net far too wide to enable them to meet the criteria laid down by Lord Frazer. However, subject to observations I will be making, this is not necessarily the case if the request is scrutinized more carefully.

12. What in my view is most important is that the United States Authorities do indeed already have specific and detailed information concerning the transactions they are interested in. This can be seen from the information which is given when particulars of each of the Banks is forthcoming. In the Banks referred to in (a) to (e) particulars are given of amounts, parties concerned and the dates of the respective transaction and in some cases the reference codes relating to the transactions.

13. So far as the Bankers Trust Co. Hong Kong is concerned reference nos. of the time deposits and letters of credit indicated are given.

14. It will be noted that the request is for every considerable type of document in relation to each of the transactions concerned. Presumably the reason for this is that while the United States Authorities are likely to have an overall idea of the type of documents banks would have in their possession, it is not reasonable to expect that they will know in each case exactly what form the documentation will take.

15. I think adopting Lord Frazer's test, it is necessary to limit the Order which is made to ensure that it is only the documents of which the United States Authorities know about that are made the subject of the Order.

16. The question which then arises is the extent to which it is permissible for a judge to use a blue pencil and excise the documentation which goes beyond what can legitimately be ordered to be produced as evidence.

17. Lord Frazer dealt with this at p. 645 of Westinghouse.  It is clear that the scope for using a blue pencil is limited and that each case will depend on its own facts.

18. I am satisfied in the present case that it is possible for me to be selective and that the amount of material to be deleted is relatively insignificant and does not go to the root of the request which is being made.

19. Before I consider the extent to which deletion should be made it is necessary for me to refer to another matter.

20. Mr. Strawbridge for the Crown Solicitor conceded that the 1st Bank referred to in the particulars did not have a Branch doing business in Hong Kong. Mr. Bell submitted that this cast doubts upon the accuracy of the evidence given by the United States Authorities.

21. While I accept that there is some validity in this contention I am satisfied that the information concerning the other accounts at other Banks is accurate. I am reinforced in this belief by the affidavit sworn by Mr. Moreno's solicitor, Mr. Midgley, who deposes to the fact that his client and his Associated companies do indeed hold accounts at the Banks in question. Clearly, however, the reference to the United Coconut Planters Bank Hong Kong must be excised.

22. Using as a base the quotation I have made from the letter of request I would order that the following further deletions must be made to enable the request to conform to the requirements laid down by Lord Frazer.

I. In the definition of documents the following words will be excised:

"Such documents should include the following for each account covering the period January 1982 through and including December 1985".

In its place will be inserted the words:

"Including the following documents".

II. The only items I will allow under the heading "checking accounts" will be

A. Signature cards

B. Monthly account statement relating to the transaction referred to

C. Deposit tickets relating to the transaction referred to

D. Withdrawal items and cancelled checks relating to the transaction referred to

G. Account opening applications.

III. Under the heading "savings account" the only items I would allow would be

A. Signature cards

B. Monthly statements relating to the transaction

C. Deposit tickets relating to the transaction

D. Withdrawal items relating to the transaction

E. Withdrawal slip relating to the transaction

F. Deposit items relating to the transaction

H. Account opening applications.

IV. Under the heading "Other checking, savings, time deposit, hold mail or any other type of account or transaction" I will allow items A to I subject to the documents relating to the transactions referred to.

V. Under heading "The Banks, account nos. and certain referenced transactions include" Delete item (a) and item (h) that is the references to the United Coconut Planters Bank of Hong Kong and the Hold Mail Custodian account arrangements with the Bankers Trust Co. Hong Kong. My reason for deleting (h) is that it is of too general a nature.

23. I see no objection to the other matters referred to in the letters of request which have been adopted in the Masters Order.

24. I will now deal very shortly with the other matters complained of by Mr. Bell. He argued that the United States Authorities had failed to produce satisfactory evidence that the proceedings were likely to be instituted. This is one of the matters which has to be complied with under S. 77B of the Evidence Ordinance. Mr. Greenberg's affidavit makes it clear that if the necessary evidence is forthcoming, it is intended that criminal proceedings will go forward. I do not consider it relevant that this is dependant upon the Grand Jury reaching a determination to this effect. Mr. Greenberg is obviously the person who is in a position to make an assessment of the matter. Mr. Moreno and Mr. Ward's protestations to the contrary carry little weight or conviction.

25. Equally I attach very little weight to the submissions made to the effect that the proceedings are of a political character as prescribed by S. 77B.

26. I accept that the correct test to adopt is the one referred to by Lord Widgerry in Re Bruchhausen⁽⁴⁾. It is necessary to have retard to the actual nature of the proceedings. It is evident upon reading the letter of request and supporting documents as a whole that the proceedings are not of a political character.

27. For the reasons I have given this application will be dismissed save that the deletions and modifications I have ordered will be adopted in Master O'Donnell's order. I will hear the parties on costs.

(1)   [1985] 1 W.L.R. 331

(2)    [1956] 1 Q.B. 618

(3)    [1978] A.C. 547

(4)    Unreported Crown office list 1753/85