FEDERAL COURT OF AUSTRALIA Metz Holdings Pty Ltd v Simmac Pty Ltd (No 1) [2011] FCA 263 Citation: Metz Holdings Pty Ltd v Simmac Pty Ltd (No 1) [2011] FCA 263 Parties: METZ HOLDINGS PTY LTD (ACN 059 264 210) AS TRUSTEE FOR THE ZULU TRUST AND GROUP M PTY LTD (ACN 118 506 148) AS TRUSTEE FOR THE ROUBAIX TRUST, MERVIN METZ and FARREL METZ v SIMMAC PTY LTD (ACN 062 327 397), PAUL CAMPBELL SIM, LINDA MCBRIERTY and LINDA MCBRIERTY AND EDWARD HUGH JENNINGS AS TRUSTEES FOR THE LINDA MCBRIERTY SUPERANNUATION FUND File number: WAD 114 of 2009 Judge: BARKER J Date of judgment: 23 March 2011 Catchwords: EVIDENCE – tender of a computer disk containing recordings of conversations made by using mobile telephone – whether s 138 of the Evidence Act 1995 (Cth) applies – whether contravention of s 5 Surveillance Devices Act 1998 (WA) – whether contravention of s 9 Surveillance Devices Act 1998 (WA) – exemptions held to apply – whether use of surveillance device in the public interest – no additional requirement to obtain publication order under s 31 Surveillance Devices Act 1998 (WA) Legislation: Evidence Act 1995 (Cth) s 48, s 138 Surveillance Devices Act 1998 (WA) s 3, s 5, s 9, s 31 Cases cited: Channel Seven Perth Pty Ltd v "S" (A Company) [2005] WASC 175; (2005) 30 WAR 494 Channel Seven Perth Pty Ltd v "S" (A Company) [2007] WASCA 122; (2007) 34 WAR 325 Date of hearing: 22 March 2011 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 31 Counsel for the Applicants: Mr P Mendelow Solicitor for the Applicants: Karp Steedman Ross-Adjie Lawyers Counsel for the Respondents: Mr PG McGowan Solicitor for the Respondents: Metaxas & Hager IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 114 of 2009 BETWEEN: METZ HOLDINGS PTY LTD (ACN 059 264 210) AS TRUSTEE FOR THE ZULU TRUST AND GROUP M PTY LTD (ACN 118 506 148) AS TRUSTEE FOR THE ROUBAIX TRUST First Applicant MERVIN METZ Second Applicant FARREL METZ Third Applicant AND: SIMMAC PTY LTD (ACN 062 327 397) First Respondent PAUL CAMPBELL SIM Second Respondent LINDA MCBRIERTY Third Respondent LINDA MCBRIERTY AND EDWARD HUGH JENNINGS AS TRUSTEES FOR THE LINDA MCBRIERTY SUPERANNUATION FUND Fourth Respondent JUDGE: BARKER J DATE OF ORDER: 23 MARCH 2011 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The objection to the tender by the applicants of the compact disk referred to in [68] of the second applicant's witness statement dated 13 March 2011, and those parts of the witness statement that reproduce the content of the recordings, is overruled. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 114 of 2009 BETWEEN: METZ HOLDINGS PTY LTD (ACN 059 264 210) AS TRUSTEE FOR THE ZULU TRUST AND GROUP M PTY LTD (ACN 118 506 148) AS TRUSTEE FOR THE ROUBAIX TRUST First Applicant MERVIN METZ Second Applicant FARREL METZ Third Applicant AND: SIMMAC PTY LTD (ACN 062 327 397) First Respondent PAUL CAMPBELL SIM Second Respondent LINDA MCBRIERTY Third Respondent LINDA MCBRIERTY AND EDWARD HUGH JENNINGS AS TRUSTEES FOR THE LINDA MCBRIERTY SUPERANNUATION FUND Fourth Respondent JUDGE: BARKER J DATE: 23 MARCH 2011 PLACE: PERTH REASONS FOR JUDGMENT RULING ON ADMISSIBILITY OF TAPE RECORDING 1 In this proceeding the first applicant claims, pursuant to the Trade Practices Act 1974 (Cth) (TP Act), the rescission of a sale agreement in respect of a wholesale lighting business made with the first respondent (of which the second respondent is a director) on or about 8 May 2008, on the basis of unconscionable conduct, and damages or in the alternative compensation, as well as damages for breach of contract. All applicants claim damages against the second respondent under the TP Act or alternative relief. 2 At trial on 22 March 2011, counsel for the applicants tendered the witness statement of the second applicant which included a computer disk containing recordings of conversations he had earlier made using his mobile telephone involving himself, his son, the third applicant, and the second respondent on various occasions between 31 October 2008 and 20 April 2009. The subject matter of the recordings is relevant to the claims made by the applicants and in particular the claim of unconscionable conduct. 3 The first and second respondent object to the tender of the disk – or more particularly the sounds recorded on it – and those parts of the witness statement that reproduce the conversations on the disk, on the basis that the initial recording was illegally made and cannot be published, having regard to the terms of the Surveillance Devices Act 1998 (WA) (SD Act). They rely upon s 138(1)(a) of the Evidence Act 1995 (Cth) to contend that the Court should not admit the disk into evidence. 4 Section 138(1) of the Evidence Act provides: (1) Evidence that was obtained: (a) improperly or in contravention of an Australian law; or (b) in consequence of an impropriety or of a contravention of an Australian law; is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained. 5 There is no issue between the parties that a recording or copy of it may, if relevant, be adduced in evidence under the Evidence Act. In this regard, note Evidence Act s 48(1), (4) and definition of "document" in para (c) in Pt 1 of the dictionary. The issue raised by these respondents is confined to whether or not the circumstances are such that s 138 applies and whether the Court should refuse to exercise its discretion under s 138(1) to admit the document, being the disk with the recorded sounds on it, into evidence. 6 The applicants deny that the initial recording was made in contravention of the SD Act and say no question of the exercise of the s 138 discretion arises. 7 Aspects of the operation of the SD Act have been considered by the Western Australian Court of Appeal in Channel Seven Perth Pty Ltd v "S" (A Company) [2007] WASCA 122; (2007) 34 WAR 325 (Channel Seven Perth 2007). The Court of Appeal upheld the decision of the primary judge in Channel Seven Perth Pty Ltd v "S" (A Company) [2005] WASC 175; (2005) 30 WAR 494 (Channel Seven Perth 2005), to refuse to grant an order under s 31 of Pt 5 of the SD Act permitting publication or communication of a private conversation, or a report or record of a private conversation, or a record of a private activity recorded on a listening device or an optical surveillance device under the SD Act. 8 A question arises in relation to the current tender whether s 31 and related provisions in Pt 5 of the SD Act are of any relevance. 9 The SD Act deals in Pt 2 with the regulation of use, installation and maintenance of listening devices and surveillance devices, and in Pt 3 with restrictions on publication or communication of private conversations and activities. In Pt 5 the SD Act deals with the use of surveillance devices in the "public interest". 10 For present purposes, s 5(1) of the SD Act in Pt 2 makes it an offence, subject to subs (2) and (3) for a person to install, use or maintain a listening device (a) to record, monitor or listen to a private conversation to which that person is not a party, or (b) to record a private conversation to which that person is a party. 11 On the face of it, the recordings made by the second applicant of the conversation involving him, the third applicant and the second respondent fall foul of s 5(1) of the SD Act. 12 Section 5(2) provides that subs (1) does not apply to a range of circumstances, none of which is immediately relevant in this case. 13 Section 5(3) is however relevant here. It provides that so far as s 5(1)(b) is concerned, it will not apply to the installation, use or maintenance of a listening device by or on behalf of a person who is a party to a private conversation if, amongst other factors: (c) each principal party to the private conversation consents expressly or impliedly to that installation, use or maintenance; or (d) a principal party to the private conversation consents expressly or impliedly to that installation, use or maintenance and the installation, use or maintenance is reasonably necessary for the protection of the lawful interests of that principal party. 14 Section 5(3)(c) is not applicable here because the second respondent did not consent expressly or impliedly to the recording. However, s 5(3)(d) is, in my view, satisfied, as the second applicant, who recorded the conversation, was also a principal party, as that term is defined in the SD Act, and consented to the recording. See generally Channel Seven Perth 2005. In this regard, s 3 of the SD Act defines "principal party" to mean: (a) in relation to a private conversation, a person by or to whom words are spoken in the course of the conversation; and (b) in relation to a private activity, a person who takes part in the activity. The expression "private conversation" is also defined by s 3 and plainly includes the conversation between the second and third applicants and the second respondent in this case. 15 In these circumstances, there is no contravention of s 5(1)(b) of the SD Act by reason of satisfaction of s 5(3)(d) of the SD Act. 16 As noted above, the SD Act not only deals with regulation of installation and use of surveillance devices, but also by Pt 3 places restrictions on publication or communication of private conversations and activities. Section 9(1), subject to subs (2), makes it an offence for a person to knowingly publish or communicate a private conversation, or a report or record of the private conversation, or a record of a private activity that has come to the person's knowledge as a direct or indirect result of the use of a listening device or an optical surveillance device. 17 Section 9(2) exempts from the application of subs (1) a number of publications or communications including relevantly, pursuant to (a)(ix), a publication or communication made "in the course of any legal proceedings". 18 Section 9(3) of the SD Act however further provides that: (3) Subsection (2) only provides a defence if the publication or communication — (a) is not more than is reasonably necessary — (i) in the public interest; (ii) in the performance of a duty of the person making the publication or communication; or (iii) for the protection of the lawful interests of the person making the publication or communication; (b) is made to a person who has, or is believed on reasonable grounds by the person making the publication or communication to have, such an interest in the private conversation or activity as to make the publication or communication reasonable under the circumstances in which it is made; (c) is made by a person who used the listening device to record, monitor or listen to that conversation or an optical surveillance device to record or observe that private activity in accordance with a warrant or an emergency authorisation issued under Part 4; or (d) is made by an authorised person employed in connection with the security of the Commonwealth under an Act of the Commonwealth relating to the security of the Commonwealth. 19 Returning to s 9(2)(a)(ix), the expression "legal proceedings" is not defined in the SD Act. In my view a broad interpretation should be given to it, such that it includes not only any legal proceedings under the law of Western Australia, but any legal proceedings anywhere, and certainly any legal proceedings in Australia including in the Federal Court of Australia. That such a broad interpretation should be given to the expression follows not only from the literal words used in the exemption provision, but also from the statement made in s 4(1) of the SD Act that the SD Act is intended to bind the Crown in right of the State but also in all its other capacities so far as the legislative power of the Western Australian Parliament provides. Section 4(2), however, limits this intention by making it clear that the SD Act does not apply to activities and operations of a prescribed Commonwealth agency, instrumentality or body, as defined in the Act (which do not include any federal courts). Overall it is clear that the Western Australian Parliament intended that the expression "any legal proceedings" should be broadly construed. 20 In this particular proceeding, the Court pursuant to its case management powers required, prior to the trial of this proceeding, and for the purpose of managing the proceeding more efficiently and effectively, that witness statements of proposed witnesses be exchanged. In the course of complying with this requirement the witness statement of the second applicant was filed, in which notice of his intention to rely upon the recordings that he made came to light. In my view, that disclosure or communication of the recordings or their contents is expressly countenanced by s 9(2)(a)(ix) of the SD Act. 21 Similarly, the tender of the disk containing the recordings and the reliance on its content at trial, is also a publication made in the course of a legal proceeding as that expression is used in s 9(2)(a)(ix) of the SD Act. 22 However, as McLure JA (with whom Pullin JA agreed) noted in Channel Seven Perth 2007, the exceptions created by s 9(2) are not only narrowly confined themselves but are further narrowed by the requirement in s 9(3), that subs (2) only provides a defence if the publication or communication satisfies one or other of the further requirements in subparas (a)-(d) of subs (3). 23 In this regard, the applicants say that the publication here in this proceeding meets the requirement in s 9(3)(a)(iii), namely, that it is for the protection of the lawful interests of the person making the publication. 24 I accept that submission. The circumstances of this case are such that on the evidence before me a dispute ensued at material times between the applicants and the first and second respondents concerning the legal obligations of the first and second respondents towards the applicants. I have little difficulty in finding that when the second applicant made the recordings of the conversations with the second respondent, not only did he do so to protect the lawful interests of the second applicant and the first applicant, as noted above, but that the further publication of the contents of the recordings in this proceeding is to the same end, namely, in order to protect their lawful interests arising under and in relation to the sale agreement. Accordingly, I find s 9(3)(a)(iii) of the SD Act is satisfied. 25 Therefore the publication of the recordings and their subject matter in this proceeding at trial for these purposes means there is no contravention of the prohibition otherwise created by s 9(1) of the SD Act. 26 Part 5 of the SD Act, as I have also explained above, makes provision for the use of surveillance devices in the "public interest". It was that part of the Act that was of particular consideration in the Channel Seven Perth cases referred to above. Part 5 of the SD Act obviously is important in circumstances where one or other of the exemptions to installation, use or maintenance of a device provided in Pt 2 of the SD Act, or the exemptions to publication in Pt 3, are not relevant. Indeed, each of the relevant provisions of these Parts in providing exemptions includes the exemption that the use or publication was "in accordance with Part 5", see s 5(2)(d); s 6(2)(d); s 9(2)(a)(viii). 27 Under Pt 5 of the SD Act, a person, amongst other things, may publish or communicate the private conversation or a report or record of a private conversation, or a record of a private activity that has come to their knowledge as the result of the use of a device, if they have the benefit of a publication order made by a judge under s 31 of the SD Act. 28 Part 5 of the Act, however, stands alone from Pt 2 and Pt 3. It is concerned with the use of surveillance devices generally in the public interest and the publication and communication of information obtained from their use in the public interest. 29 Accordingly, in a case such as the present, where a person is exempted by s 5 of the SD Act, which appears in Pt 2, and by s 9 of the SD Act, which appears in Pt 3, there is no additional requirement to satisfy the use qualifications under Pt 5 or obtain a publication order under s 31 of Pt 5 of the SD Act. To the extent that the first and second respondents submit otherwise, the submission is rejected. conclusion and order 30 In the circumstances of this case, there is no demonstrated contravention of the Western Australian SD Act and so no contravention of an Australian law which brings into operation s 138 of the Evidence Act. Consequently, the objection to the tender of the compact disk and relevant parts of the witness statement of the second applicant should be overruled. 31 The Court orders: 1. The objection to the tender by the applicants of the compact disk referred to in [68] of the second applicant's witness statement dated 13 March 2011, and those parts of the witness statement that reproduce the content of the recordings, be overruled. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate: Dated: 23 March 2011