FEDERAL COURT OF AUSTRALIA Chen v Protel Communications International Pty Ltd [2007] FCA 1374 YOUFA CHEN v PROTEL COMMUNICATIONS INTERNATIONAL PTY LTD VID 689 OF 2007 YOUFA CHEN V SAISE PTY LTD VID 690 OF 2007 JESSUP J 31 AUGUST 2007 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 689 OF 2007 BETWEEN: YOUFA CHEN Applicant AND: PROTEL COMMUNICATIONS INTERNATIONAL PTY LTD Respondent JUDGE: JESSUP J DATE OF ORDER: 31 AUGUST 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for leave to appeal be dismissed. 2. Pending argument on behalf of the parties, costs be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 690 OF 2007 BETWEEN: YOUFA CHEN Applicant AND: SAISE PTY LTD Respondent JUDGE: JESSUP J DATE OF ORDER: 3 SEPTEMBER 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for leave to appeal be dismissed. 2. Pending argument on behalf of the parties, costs be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 689 OF 2007 VID 690 OF 2007 BETWEEN: YOUFA CHEN Applicant AND: PROTEL COMMUNICATIONS INTERNATIONAL PTY LTD AND BETWEEN: Respondent AND YOUFA CHEN applicant SAISE PTY LTD Respondent JUDGE: JESSUP J DATE: 31 AUGUST 2007 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 Before the court are two applications for leave to appeal from interlocutory orders made by the Federal Magistrates Court of Australia on 17 July 2007. The orders were made in two proceedings in that court, in each of which the present applicant is the first respondent, and a company with which he is associated, Newtech Australia Pty Ltd ("Newtech"), is the second respondent. One proceeding is brought by Saise Pty Ltd and the other proceeding is brought by Protel Communications International Pty Ltd. They are the respondents to the present applications for leave to appeal. The two proceedings below are highly similar, if not substantially identical, and no need to distinguish between them presently arises. 2 The nature of the interlocutory issues before the Federal Magistrate appears clearly from his Honour's comprehensive reasons for judgment published on 17 July 2007: Protel Communications International Pty Ltd v Chen [2007] FMCA 1135. The applicant is facing trial on indictment in the District Court of Queensland on six counts of dishonestly obtaining telecommunications services. In the Federal Magistrates Court proceedings, the applicant and Newtech are sued for damages and other remedies for contraventions of the Trade Practices Act 1974 (Cth), the Fair Trading Act 1999 (Vic) and the Fair Trading Act 1989 (Qld). According to the reasons of the Federal Magistrate, it seems that the proceedings are based upon the same transactions as are the subject of the indictment in the District Court. 3 In April 2007 (before the presentation of the indictment), the Federal Magistrate gave directions for the conduct of the proceedings before him, including directions for the delivery of particulars and for the giving of discovery. Subsequently, after the presentation of the indictment, the applicant applied for a stay of the Federal Magistrates Court proceedings until after the completion of the criminal trial in Queensland, which will commence in early February 2008 and is anticipated to run for some five weeks. On 17 July 2007, the Federal Magistrate refused the application for a stay, and confirmed the procedural directions which he had given. The applicant seeks leave to appeal from the Magistrate's refusal to grant a stay, and the parties agreed that the application for leave and, assuming leave be granted, the appeal, be heard together. Pursuant to s 25(1A) of the Federal Court of Australia Act 1976 (Cth), the Chief Justice directed that the application for leave, and the appeal if leave be granted, be heard by a single Judge of the court. 4 I approach the application for leave to appeal in accordance with the approach endorsed by the Full Court in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, 398-400, namely, by considering whether the judgment of the Federal Magistrate is attended with sufficient doubt to warrant its being reconsidered on appeal and whether substantial injustice would result if leave were refused, supposing the decision to be wrong. The Federal Magistrate's decision was a discretionary one, and will be disturbed on appeal only if it was infected by error, such as by the Magistrate having acted upon a wrong principle, having taken extraneous or irrelevant matters into account, having mistaken the facts, having omitted to take some material consideration into account, or the like: House v The King (1936) 55 CLR 499, 505. Neither was the Federal Magistrate's discretionary judgment upon a matter which finally determined the rights of the parties before him. It was made upon a matter of practice and procedure, in which respect an appellate court will exercise particular restraint: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177. 5 As is apparent from the reasons of the Federal Magistrate, the grounds upon which the applicant sought a stay of the civil proceedings were many, and were developed by him, and resisted by the respondents, in considerable detail. It is sufficient for present purposes to note that both parties relied upon the judgment of Wooten J in McMahon v Gould (1982) 7 ACLR 202 as providing a framework within which the discretion of a Judge or Magistrate in civil proceedings, when faced with an application for a stay of those proceedings upon the ground of the proximity of associated criminal proceedings, should be exercised. The Magistrate disposed of the application before him in accordance with McMahon v Gould, and it has not been suggested on behalf of the applicant that he misconceived the nature of the task in which he was engaged. 6 Although the draft Notices of Appeal which the applicant filed in this court contained grounds which ranged widely over the various discretionary considerations adverted to by the Federal Magistrate, at the hearing of the application for leave, counsel for the applicant ultimately relied only upon what they alleged was a single, but important, error. It seems that, in the criminal trial, identification will be a significant issue. Although (as was stressed by counsel for the respondents) the Magistrate was not provided with a full suite of witness statements for the criminal trial, he did have before him the witness statements of four, apparently important, witnesses which foreshadowed evidence of things said and done by a Mr David Jin. It seems that it will be the prosecution's case that Mr Jin was the applicant. Three of the witnesses had spoken to Mr Jin by telephone, while the fourth had spoken to him by telephone, and had met him on one occasion. The fourth has apparently been shown "photo boards" by the police, and has made certain indications as to identity. The four proposed witnesses were, at the time of their contacts with Mr Jin, associated with one or other of the respondents. It seems to be accepted that it will be inevitable that each will be giving evidence in the proceedings before the Federal Magistrate. In those proceedings, identification will also be in question, since the Amended Statements of Claim allege that the applicant used different aliases, including that of David Jin. 7 It is submitted on behalf of the applicant that the conduct of a civil trial – extending, it would seem, over at least two days – would inevitably expose persons associated with the respondents, including the four witnesses to whom I have referred, to the applicant in a context in which he is visibly part of the defence of those proceedings. The very fact that the applicant will, as the first respondent in those proceedings, be present in court, and instructing his counsel, when those four witnesses are giving their evidence will inevitably, so it is submitted, give them so much the more confidence, if not certainty, in identifying the applicant as the person known to them as Mr Jin as to present a real risk of the corruption of the integrity of the identification evidence which they subsequently give in the criminal trial. 8 In these respects counsel for the applicant referred me to a deal of jurisprudence about identification evidence. Amongst other authorities, counsel referred to Davies v The King (1937) 57 CLR 170, 182; to Domican v R (1992) 173 CLR 555, 565; to R v Akgul (2002) 5 VR 537, 547; to Jamal (2000) 116 ACrimR 45; and to R v Mendoza [2007] VSCA 120, [25]. These were all criminal cases in which the consequences of identification evidence having been dealt with in a certain way, or arguably infected in various ways, were considered at the appellate level. They were used by counsel for the applicant to demonstrate the inherent risks of providing intended Crown witnesses with an opportunity to associate a real person to whom they have been exposed out of court with the person about whom they propose to give evidence at trial, and as to whose identity there might otherwise be an element of uncertainty. Counsel submitted that, by allowing the civil proceedings to go ahead, the Federal Magistrate was in effect setting up a situation in which the witnesses would have the opportunity to observe the applicant defending allegations based on evidence they gave about Mr Jin, thereby presenting the potential, at least, to corrupt their identification evidence in the criminal trial. 9 Counsel for the applicant submitted that it was not a question of whether the court could be satisfied that there would definitely be a miscarriage of justice in the way I have described; nor even that it was probable that such a miscarriage would occur. The question was, they submitted, whether there was "a real and not merely notional danger of injustice in the criminal proceedings": McMahon v Gould 7 ACLR at 206. 10 How then did the Federal Magistrate deal with this problem of the potential corruption of the identification evidence which will be presented at the criminal trial? In par 22 of his reasons, the Federal Magistrate identified the broad nature of the case which had been made before him as follows: Counsel for the first respondent developed the argument on the basis that there were 4 significant factors relevant to the exercise of the discretion in this case: a) That there was potential of adverse publicity. b) The proximity of the criminal proceedings to the civil proceedings which would arguably result in the preparation for one would interfering with preparation for the other. c) That there is a potential for a miscarriage of justice as a result of the potential for witnesses to change their version of events or improve their identification evidence following cross-examination in the civil proceedings. d) That the first respondent may lose the forensic disadvantage of his right of silence (in this case, not having to disclose his defence to the criminal proceedings if he must defend the civil proceedings prior to the close of the crown case in the criminal proceedings). This argument was developed to include an argument that his defence of the civil proceedings may also lead to a chain of enquiry by the Director of Prosecutions which may result in the Director of Prosecutions obtaining further evidence against him. His Honour dealt with each of those factors in turn. In that part of his reasons which dealt with the factor lettered (c), his Honour said (pars 27 and 28): The extent of the committal proceedings has not been disclosed in the affidavits. I have no evidence as to whether or not the witnesses have already been cross-examined in a committal hearing in Queensland before the proceedings reached the stage of the prosecution presenting an indictment. It would be unusual for the defendant in a serious criminal case that is being strongly defended to not cross-examine the witnesses of the prosecution at some length in a committal proceeding. It does not seem to me that there is any real risk of miscarriage of justice as a result of the conduct of the civil trial, at least to the extent that witnesses may change their evidence as a result of cross-examination or the outcome of the civil proceedings. A transcript will be available of the evidence that the witnesses give in the civil trial. Indeed, it may well be to the respondent's advantage to have a further version of events of some witnesses in the civil proceedings from which they may be cross-examined in the criminal proceedings. To the extent that such cross-examination may disclose the first respondent's defence, this is considered below. Counsel for the applicant submitted that the Magistrate erred by simply not dealing with the point about identification evidence. According to them, the Magistrate noted the argument made before him that there was a potential for a miscarriage of justice as a result of witnesses improving their identification evidence, but, at the point of making his decision, he appears to have entirely overlooked that argument. 11 The way in which the argument was advanced before the Federal Magistrate is, I consider, important to the disposition of the applicant's application for leave to appeal. No transcript of the hearing before the Magistrate was produced in evidence. Neither was there an affidavit deposing to the course of argument before the Magistrate. The only evidence of how the applicant advanced his case was that contained in the reasons of the Magistrate as set out above. Counsel for the applicant informed me that their client did not refer the Magistrate to the authorities upon which they relied in this court on the matter of identification, such as those to which I have referred in par 8 above. They informed me that the identification point was run before the Federal Magistrate, but otherwise provided little detail on the nature of their client's argument at that level. Relevantly for present purposes, I am left with the Magistrate's statement that the appellant argued that there was a potential for a miscarriage of justice as a result of the potential for witnesses to improve their identification evidence following cross-examination in the civil proceedings. The emphasis here, quite clearly, is upon the opportunity which cross-examination in civil proceedings would give witnesses to improve their identification evidence. It is not upon the opportunity which those witnesses would have, by their own observations, to associate the applicant with the man about whom it is proposed that they will give evidence at the criminal trial. 12 This is not a case in which the Federal Magistrate's reasons were cursorily expressed or demonstrate an apparent misapprehension of the case advanced before him. His Honour's reasons were thorough and detailed. He dealt with each of the matters which, according to those reasons, had been urged upon him on behalf of the applicant in a structured and systematic way. He considered each of the criteria set out in the judgment of Wooten J in McMahon v Gould. In the circumstances, it is significant that his Honour's reasons do not deal with the particular dimension of the applicant's potential concerns about the corruption of identification evidence which were at the forefront of his case on the application for leave to appeal. If those concerns were as important to the applicant then as they obviously are now, and if submissions made on his behalf appropriately reflected that importance, it seems quite out of harmony with the quality of the Federal Magistrate's reasons generally that he should have overlooked them. I am not prepared to make that assumption in the absence of direct evidence as to the content of the applicant's case before the Federal Magistrate, and as to the emphasis with which the point in question was developed before him. 13 On the only material before the court, the applicant's case was limited to the potential for identification evidence to be changed following cross-examination. I am not satisfied that the Federal Magistrate had the benefit of a submission on behalf of the applicant which sufficiently emphasised the particular dimension of the problem of identification evidence which has been agitated in this court. Once the limits of the applicant's argument before the Federal Magistrate are appreciated, it becomes evident that that argument was considered, and placed on the scales for such value as it had, by the Federal Magistrate. That appears from the first sentence of par 28 of his reasons, to which I have referred. That is to say, I accept that the Federal Magistrate gave appropriate consideration to the prospect that "witnesses may change their evidence as a result of cross-examination". Given the overall structure of his Honour's reasons, I think that is a sufficient, albeit compendious, indication that his Honour took into account, and dealt with, the applicant's case on the matter of identification evidence. 14 Although, as I have noted, conceding that the authorities upon which they relied before me were not before the Federal Magistrate, counsel for the applicant submitted that the propositions for which those authorities stood were so self-evident that any judicial officer should have been conscious of them. I accept that so far as it goes, but it does not, in my view, provide support for the proposition that a judicial officer in the position of the Federal Magistrate in the present case should be expected not only to appreciate the importance of avoiding the corruption of identification evidence, but also to perceive the significance of the way in which such corruption might arise in the absence of the particular dimension of the problem having been placed before him in a clear and unambiguous way. 15 The Federal Magistrate's reasons set out the nature of the argument advanced on behalf of the applicant before him. The terms of those reasons also indicate that his Honour considered that argument and weighed it in the balance. That argument was, of course, only one of a number of considerations which he took into account, as he was obliged to do. His general approach to the discretionary exercise in which he was engaged was not criticised before me. Nor could it have been. As I mentioned above, his Honour's reasons bespeak a careful and systematic approach to the task. Only if I accept that his Honour overlooked a submission which was clearly and unambiguously put to him in the way it was put to me would I entertain any doubt about the Federal Magistrate's judgment. For reasons set out above, I do not accept that his Honour did overlook any such submission. 16 The question of "substantial injustice" presents a little differently in the present case from the way it would present in a conventional case in which it might be possible to say that a judgment under appeal was either right or wrong. What might, on one view of the matter, be "wrong" about the Federal Magistrate's judgment is to be discerned in the possibility that he did in fact overlook an argument on behalf of the applicant that was put to him with greater clarity, and less ambiguity, than I have been prepared to assume. Even were this such a case, I would not be persuaded that substantial injustice would in all probability be visited upon the applicant. The point upon which he now relies depends largely upon assumptions as to the course of events which are yet to occur. His point effectively anticipates the dynamics of, and the interactions which may accompany, the forthcoming civil trial. It is not at all clear to me that the Federal Magistrate, with the co-operation of the paries, would lack the ability so to organise the logistics of that trial as to deal fairly with the applicant's concerns about identification. Various expedients were canvassed in the course of submissions before me. I need not mention them further, since it is apparent that they have not been raised with the Federal Magistrate. It is he, I consider, who should address issues such as these, and I am not prepared to assume that he would not do so in a satisfactory way. Nor am I prepared to assume that, if no practical means of avoiding the problems about which the applicant is concerned could be found, his Honour would not re-consider any application the applicant might then make. My point here is that all these possibilities lie in the future, and are matters of practice rather than substance which are pre-eminently suitable for the Federal Magistrate to address. A consideration of them leads me to the conclusion that the occurrence of substantial injustice is an unlikely prospect even if I have been mistaken in any assessment of the correctness of his Honour's judgment. 17 For the above reasons, I propose to refuse leave to appeal. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 31 August 2007 Counsel for the Applicant: Mr G Nash QC & Mr M P Cleary Solicitor for the Applicant: Pryor Tzannes & Wallis Counsel for the Respondent: Mr D Harrison Solicitor for the Respondent: Efron & Associates Date of Hearing: 28 August 2007 Date of Judgment: 31 August 2007