Written by Edwina Kwan (关凯丽) and Jay Tseng (曾誌輝).
This article outlines the findings of the Court in the Haiye case and considers the implications for parties involved in litigation during the pandemic who have witnesses located outside Australia and are required to give evidence by video link.
In the midst of the COVID-19 pandemic, the NSW Supreme Court (Court) vacated the hearing dates for an 8-day trial due to difficulties arising out of the pandemic. Specifically, the Court in Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd  NSWSC 732 (Haiye) vacated the hearing dates on the basis of the unfairness caused to a party whose three key witnesses resided in China.
The Key Issues of the Case
In the Haiye case the plaintiffs alleged that the defendants engaged in fraud, an allegation which depended upon the witnesses' oral evidence and findings on credibility during the trial.
Due to the onset of the COVID-19 pandemic, the plaintiffs applied to the Court to vacate the hearing dates for the trial on the basis that three of its key witnesses were Chinese citizens who resided in China. This application was contested by the defendants.
The Court noted that the application made by the plaintiffs was entirely as a consequence of the COVID‑19 pandemic.
The key issues for the Court were:
- whether it was possible for witnesses to travel to Australia from China due to the pandemic; and
- whether the witnesses should be required to give evidence by video link.
Plaintiffs' arguments as to why witnesses should not be required to give evidence
The principal witnesses for the plaintiffs were citizens of, and resided in, China. The plaintiffs' position was that these witnesses were unable to travel to Australia to participate in the hearing in the normal way, and even if it were technically feasible for them to travel to Australia, the witnesses did not want to do so for health reasons. The plaintiffs further argued that these witnesses should not be put to the choice of risking their health or losing their case because of their non-attendance at the hearing.
The plaintiffs also argued that Chinese law did not permit those witnesses to participate in the hearing by audio visual link, and even if it did, the issues in this case made it entirely unfair that they be required to give their evidence and instructions by audio and visual link.
Practicalities of Travelling from China to Australia to give evidence
The Court looked at recent publications of the Australian Federal Government and considered the practicalities of the Chinese witnesses having to apply for visas to enter Australia for the court hearing during the pandemic. Justice Robb was not persuaded that the witnesses would be granted exemptions by the Australian Government to enter Australia to participate in the court hearing. In making this finding, Robb J noted that it would be improper and unjust for a Court to impose on a person a serious risk to their health to avoid the consequences of not attending a court hearing in person in Australia.
Providing evidence by video link
In considering whether to order the evidence to be given by the witnesses located in China by video link, the Court considered whether it would be in the interests of justice to do so. One of the central concerns for the Court was whether it would be unfair or unjust to the parties in the proceedings.
In concluding that it would be unfair for the Chinese witnesses to be cross-examined by video link, the Court considered the following factors:
a. without making any findings as to whether it was legal under Chinese law, the Court found that there was a risk that the Chinese witnesses would be contravening Chinese Procedural Law if they were to give evidence by video link and therefore it would be unfair;
b. there were difficulties with conducting cross-examination by video link.
Those difficulties included:
- the assessment by the Court of the credibility of witnesses;
- the use of interpreters who would be required to interpret questions from English to Chinese and then answers from the witness from Chinese to English;
- there would be a physical separation between the interpreters and the witnesses, which would lead to inefficiency, delay and unfairness;
- to the extent there would be cross-examination on documents, there were difficulties with doing this by video link;
c. the Court's powers to order a witness to give evidence by audio visual link intruded upon the sovereignty of a foreign country and raised public international law issues;
d. it was impractical to suggest video link evidence could have been heard in Hong Kong or Taiwan as the witnesses would still be exposed to the same health risks of travelling to Australia; and e. this case was "exceptional" in that that the whole of the plaintiffs' case was found to hinge on the evidence from the witnesses located in China.
Based on all of these circumstances, the Court held that it would be unfair on the plaintiffs to give evidence by video link and proceed to trial and therefore the hearing dates were vacated.
Implications of Haiye
As a result of the COVID-19 pandemic, many parties in disputes will be accustomed to conducting business and working from home by video link. Similarly, many Australian courts have also implemented various measures towards conducting part or all of their court proceedings by video link.
While there have been a number of court decisions commenting on the impact of the COVID-19 pandemic and emphasising that the wheels of justice are to move on (for example: Australian Securities and Investments Commission v GetSwift Ltd  FCA 504; Capic v Ford Motor Company of Australia Ltd (Adjournment)  FCA 486 and Giam v Patterson  NSWSC 593), the judgment of Robb J in Haiye is a reminder that there are limits to what is practically possible and that above all, parties must be treated fairly. The COVID-19 pandemic is no exception.
Given the logistical challenges of running face-to-face court trials during the COVID-19 pandemic, and the differing approaches of State courts for contested hearings, there will be particular issues for parties who intend to rely upon the evidence of witnesses who reside outside of Australia.
Practical Tips for Parties
Haiye is a reminder that there are risks with proceeding to trial during the COVID-19 pandemic, especially using video link to conduct the cross-examination of witnesses who reside overseas for issues which are integral to the outcome of a case. Haiye is the second case to highlight the unfairness in conducting a cross-examination by video link of witnesses who reside in China (see Motorola Solutions, Inc v Hytera Communications Corporation Ltd (Adjournment)  FCA 539) (Motorola Solutions).
Factors to consider when considering conducting virtual hearings before the Australian courts:
Delaying a hearing if your witness (or another party's witness) is outside of Australia
As seen in Haiye and Motorola Solutions, it may be possible to apply to either vacate hearing dates or seek an adjournment pending the resolution of the issues on how evidence is to be delivered. Parties should ensure that there is a genuine basis for these applications, otherwise there is a realistic possibility of an adverse costs order.
Proceeding with a hearing if your witness is outside of Australia
You should assess your options for obtaining the evidence of witnesses (or potential witnesses) outside of Australia. All of the Australian court procedural rules have incorporated the formal procedures required under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, which enables evidence of foreign witnesses to be given by video link. However, the COVID-19 pandemic is likely to delay this process.
Parties should consider whether there is documentary evidence available or whether there are alternative witnesses who can provide the evidence to prove their case. Those witnesses might be in Australia, or in a country whose domestic laws are unlikely to prevent citizens giving evidence by video link in Australian legal proceedings.
Another key concern will be ensuring fairness throughout the whole hearing. Strategies and options should be devised to ensure the counterparty does not have a right to challenge the evidence based on the location of the witness, or the means by which evidence is delivered.
Proceeding with a hearing if another party's witness is outside of Australia
If a party chooses to proceed with a hearing where a counterparty's witness resides outside of Australia, it should ensure that it has the ability to effectively cross-examine the other party's witness.
If technical difficulties arise during the delivery of evidence, this may play into considerations of whether there is a basis to challenge the decision, order or judgment, on the basis of a failure to accord due process.
However, this does not necessarily mean the challenge will be successful and will often depend on the facts and circumstances of the hearing and how evidence has been delivered. Some obvious considerations to bear in mind will be the quality of the sound, imagery, internet connection and privacy and security of the environment in which evidence is given, including whether the witness if giving evidence alone and uncoached.
Consider international arbitration to resolve disputes
Parties involved in cross-border disputes should also consider alternative options to resolve their disputes, such as arbitration.
Issues facing witnesses outside of Australia giving evidence by video link in court proceedings are unlikely to arise in arbitration proceedings where witnesses often give evidence by video link. The COVID-19 pandemic has only increased the regularity of this occurrence and is reflected in the numerous guides and practical tips for conducting virtual hearings provided by the leading arbitral institutions.
More recently, the KWM international arbitration team has seen an uptake by clients in resolving their disputes virtually by arbitration. These experiences reflect what is becoming an increasing trend across all international arbitration practices globally for parties to resolve their disputes virtually during the COVID-19 pandemic and going forward.
The full NSW Supreme Court judgment can be found here.