New South Wales Supreme Court CITATION : SEE v HARDMAN & ANOR [2002] NSWSC 234 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 3682 of 2001 HEARING DATE(S) : 20, 21, 22, 25, 26, 27/3/02 JUDGMENT DATE : 21 March 2002 PARTIES : Louise Mary See - Plaintiff William Patrick Hardman - Defendant JUDGMENT OF : Bryson J at 1 COUNSEL : Oakes SC and Fendekian - Plaintiff Whittle SC and BJ Burke - defendant SOLICITORS : Watson & Watson - Plaintiff HIckson Wisewoulds - Defendant CATCHWORDS : EVIDENCE - Listening Devices Act - Evidence unlawfully obtained - plaintiff secretly recorded conference with family members and lawyers about circumstances of transactions made by her mother in 5 months before her death which conferred benefits on one grandson - conference was agreed to be without prejudice - plaintiff made recording to enable herself to consider fully and reflect on what was said - later she brought proceedings to remove trustee appointed by mother's will for not investigating circumstances of those transactions - trustee was her brother and father of favoured grandson - at the hearing the defendant waived without prejudice reservation, gave evidence of statements at conference and plaintiff tendered tape and transcript in reply - HELD - unlawful under Listening Devices Act s.5 because not reasonably necessary subs.5(3)(b) - not inadmissible under s.13 because within exception in subs.13(2)(b) conversation came to her knowledge otherwise than through the use of the recording - inadmissible under Evidence Act s.138 because illegal and an impropriety and in application of weighing exercise in subs.138(3). LEGISLATION CITED : Listening Devices Act 1984 (NSW) s.5, s.13 Evidence Act 1995 (N.S.W.) s.138 Violi v. Berrivale Orchards Ltd (2000) 99 FCR 580 CASES CITED : Scanruby Pty Ltd v. Caltex Petroleum Pty Ltd [2000] NSWIRComm 89 Amalgamated Television Services v. Marsden [2000] NSWCA 167 R v. Eade (2000) 118 A Crim R 449 DECISION : Tender of tape and transcript rejected. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON J. THURSDAY 21 MARCH 2002 3682/01 LOUISE MARY SEE v WILLIAM PATRICK HARDMAN & ANOR JUDGMENT 1 HIS HONOUR: I now state my revised reasons for my ruling at t.16. 2 The plaintiff's counsel has read in reply her affidavit of 8 March 2002. The evidence has not yet gone beyond reading affidavits and there has been no cross-examination. The plaintiff in her affidavit produces exhibit LS1, a tape recording, and exhibit LS2, which she says is a fair transcript of material recorded on the tape of events at a meeting which took place on 10 May 2001. The defendant objects to the tender of the tape and transcript. 3 That meeting has been dealt with in several earlier affidavits, and they are the affidavit of the defendant at paragraph 16, the affidavit of Mr Larosa at paragraphs 35, 36 and 37 and the affidavit of Mr Osburg at paragraphs 49, 50 and 51. It would have been possible for the plaintiff herself and Mr Richard Watson her solicitor, whose affidavits were read in chief, to deal with events at the meeting, subject to some things which appear from material recorded in the transcript exhibit LS2. I have had regard to the transcript for the purpose of this ruling although it has not been admitted in evidence generally. Statements in the transcript show that the meeting took place on the understanding of those present that it was a "without prejudice" meeting. The transcript does not show that that reservation was established at the beginning of the meeting, but that that happened at a point when the meeting was well advanced. Mr McGlynn the solicitor who attended the meeting on behalf of Mr William Hardman junior is recorded as saying "...this goes without saying, this is all without prejudice" followed by Mr Watson saying: "Yes, of course". By going into evidence on affidavit about events at the meeting it should be understood that the defendant waived reliance on the "without prejudice" reservation. The plaintiff took no objection based on the reservation to admissibility of the passages to which I have referred in affidavits read by the defendant. In effect there has been a waiver of the reservation but it took place only at the hearing before me. 4 The plaintiff in her affidavit of 8 March 2002 gives the following explanation of the events in which she made the recording: "4. In preparing my earlier affidavits I did not refer to anything said at the meeting as I was under the impression the meeting was without prejudice. 5. I was apprehensive about the meeting of 10 May 2001. Because I was concerned that the meeting would move too quickly for me to comprehend all that was taking place and the topics would be discussed which I would not there and then fully understand, I recorded the meeting with a recording device to enable me to revisit what had taken place and comprehend the conversation in an atmosphere where I did not have the apprehension caused by the meeting. 6. Because of Richard Watson's explanation of the meeting of a without prejudice meeting I expected the recording would not become evidence. 7. I did not inform anyone at the meeting that I was recording it because I did not want to embarrass myself by any of them, including my solicitor, thinking I did not understand." 5 Mr Hardman the defendant in his affidavit at paragraph 16 deals with the meeting, identifies persons who were present, says "the meeting lasted some time" and gives a very brief account of the events, not establishing in any clear way what was said. He says: "Richard Watson did not say much except to ask for documents to be given to him. Frank Larosa showed us a letter he had written to my mother dated 4 February 2000 and which she had signed to show her approval and I recall Alan Osburg said to Richard Watson words to the effect: 'We'll give you access to the documents that relate to the sale and the lease'. Richard Watson accepted that offer". 6 Mr Larosa deals with the meeting at a little greater length in his affidavit of 7 December 2001. What he says in para 35 includes: "During the course of the meeting, Richard Watson said very little apart from words to the effect: 'We've been refused access to documents on the estate and we don't know what has been going on'." 7 Later in para 36 Mr Larosa says: "At one point Richard Watson said words to the effect: 'Is Hawksun going to exercise the option to purchase the freehold under the lease?' Ross McGlynn said words to the effect: 'Yes, Will intends to do this'. I recall that at one point Alan Osburg say words to the effect: 'We will provide you with copies of all the documents relating to the sale and the lease of the hotel'." 8 He also says that he saw Mr Osburg show Mr Watson a copy of Mr Larosa's letter to Mrs Florence Hardman of 4 February 2000 and her acknowledgment. 9 Mr Osburg in his affidavit of 10 December 2001 deals with events at the meeting at paragraphs 49 and following. He says to this effect: "49..The conference lasted two hours, in the course of which both Ross McGlynn and I explained to Richard Watson in detail the transactions that had taken place between Flo and Will and their respective companies in relation to the hotel. 50. No suggestion was made by Richard Watson or Louise See at the meeting that there were other matters than clause 11 of the lease that required explanation or investigation. At one point during the meeting, Richard Watson said words to the effect: 'We have been excluded from free access to the details of all the transactions in relation to the Hotel and we can only assume that something improper has occurred and the only way we can find out is by commencing legal proceedings.' 51. At the conclusion of the meeting, it was agreed that Ross McGlynn and myself would make available to Richard Watson all documents relating to the transaction involving the Hotel, so that they could be uplifted by him and copied and returned …". 10 The material in the transcript to which plaintiff's counsel referred in showing the significance of the proposed tender appears at pages 1 and 2. At page 2, a statement by Mr McGlynn referred to "the starting point" and went on in these terms: "By that point in time the decision was made by Flo to sell the business to Will, essentially the basis of the sale, in a nutshell, was that Will was to... Larosa: May I correct that? Flo wanted to sell the business, she didn't want it kept. She wanted to sell it at (inaudible) market value. Yes, she did want to sell it at... McGlynn: Yes. At an equitable market value. Larosa: Then she later informed me that Will wanted to bid for that offer - for the hotel OK and basically I told her the market value and it would not be a problem for him, OK, because she wanted to stay, or she didn't mind him staying, with him, or, so that's … initially, it was going to go to market. Sorry, she wanted to sell it - worth to or whatever". 11 Then the transcript goes on at page 3 and following with further passages explaining, not altogether in a clear way, the evolution of the transaction. 12 Plaintiff's counsel said that the force of the material in the transcript related to the pleaded complaint that Mrs Florence Hardman did not receive adequate advice, and its force was that the transaction was supposed to be or intended to be at market value; market value was referred to in Mr Larosa's letter of 4 February 2000, and a similar position was being asserted a year later by Mr McGlynn and Mr Larosa, that what was supposed to be happening was a transaction at market value. Counsel said that the plaintiff seeks a finding that Mrs Florence Hardman intended the sale to be at market value, and that finding is supported by these statements in the transcript. 13 In addressing the objection I turn first to provisions of the Listening Devices Act 1984 and to the prohibition in section 5 of the use of listening devices. Subsection 5 (1) (b) is: (1) A person shall not use, or cause to be used, a listening device - . . . (b) to record a private conversation to which the person is a party. 14 Plainly, from the plaintiff's own affidavit, that is what happened. 15 Subsection (3) creates exceptions, relevantly in these terms: (3) Subsection(1)(b) does not apply to the use of a listening device by a party to a private conversation if - .... (b) a principal party to the conversation consents to the listening device being so used and - (i) the recording of the conversation is reasonably necessary for the protection of the lawful interests of that principal party; or (ii) the recording of the conversation is not made for the purpose of communicating or publishing the conversation, or a report of the conversation, to persons who are not parties to the conversation. 16 Plaintiff's counsel relied on the first branch of paragraph (3)(b) and on the facts deposed to by the plaintiff in her affidavit about the reasons for making the recording. The operation of paragraph 5(3)(b) was considered by Branson J in Violi v Berrivale Orchards Limited (2000) 99 FCR 580. At page 585 her Honour referred to one of the many rulings on evidence of Levine J in Marsden v Amalgamated Television Services in which his Honour expressed the view that the question whether something was reasonably necessary is to be determined objectively. Justice Branson agreed with this view and said (page 585-6, paragraph 23): "In my view, a person may only bring himself or herself within section 5(3)(b)(i) if: (a) he or she is a party to the private conversation; (b) a principal party to the conversation (who may be the persons who uses, or causes to be used, the listening device) consents to the use of the listening device; and (c) the recording of the conversation is, as a matter of objective judgment, necessary for the protection of an actual lawful interest, existing as at the time of the conversation, of that principal party." 17 I respectfully adopt these conclusions. The necessity for the protection of a lawful interest, referred to in para(c) of the passage cited, is to be determined according to facts and circumstances existing up to and at the time when the recording is made, and is not to be determined by reference to what is recorded, necessarily later in time than the decision to use the listening device and implementation of that decision – cf. Scanruby Pty Ltd v. Caltex Petroleum Pty Ltd [2000] NSWIR Comm 89 at [46] (Peterson J). 18 In my finding the listening device was used by the plaintiff, she being a party to a private conversation, and it should be understood that she herself as a principal party to the conversation consented to the listening device being so used, although its being used was not, as her own evidence shows, disclosed to any other person who was a party to the conversation. 19 In my view her wish to make a record for her own private use to assist her comprehension and to give herself an opportunity to revisit what had taken place was a lawful interest of hers. It is not the only lawful interest objectively under consideration for answering the question of reasonable necessity raised by subparagraph (3)(b)(i). The meeting was a private meeting, it was established that it was without prejudice (and the fact that a year later that reservation would be waived could not then be known) and the opportunity was there for the plaintiff to make notes, to reveal to other persons her wish to have a recording, or to ask her solicitor to make notes or otherwise make a record, as it would ordinarily be expected that a solicitor would himself do at a meeting of any importance. The reference in paragraph (3)(b)(i) to the recording of the conversation is a reference to the particular means of recording which was adopted. The conversation was a without prejudice conversation which then was and reasonably could be expected to remain off the record and not to become the subject of evidence, and it would not be reasonably expected that any final or binding arrangement would be made without in some way signalling that the reservation had ended. The plaintiff could have reasonably protected her interest in several ways without making a recording and without concealment. My finding is that there was not a reasonable necessity for making the electronic recording. From this it follows that making the recording was not within the exception, but fell within the prohibition in subsection 5(1). 20 The impact of that prohibition on the admissibility of evidence for which the Listening Devices Act 1984 provides is found in section 13 and is not left to implication. Subsections 13(1) and (2) provide: (13) (1) Where a private conversation has come to the knowledge of a person as a result, direct or indirect, of the use of a listening device in contravention of section 5 – (a) evidence of the conversation; and (b) evidence obtained as a direct consequence of the conversation so coming to the knowledge of that person, may not be given by that person in any civil or criminal proceedings (including proceedings for or in connection with the grant of bail). (2) Subsection (1) does not render any evidence inadmissible - (a) if all of the principal parties to the private conversation concerned consent to the evidence being given; (b) if the private conversation concerned comes to the knowledge of the person called to give the evidence otherwise than in the manner referred to in that subsection, notwithstanding that the person also obtained knowledge of the conversation in such a manner; (c) in proceedings for an offence against this Act or the regulations; or (d) in proceedings for – (i) an offence punishable by imprisonment for life or for 20 years or more; or (ii) a serious narcotics offence, (or in proceedings for or in connection with the grant of bail in any such proceedings) if the court considers that the evidence should be admissible. 21 The relevant operation of section 13 was stated authoritatively in the joint judgment of the Court of Appeal in another of the many holdings in Amalgamated Television Services v Marsden [2000] NSW CA 167, paragraph 30, in these terms: "[30] We consider that his Honour rightly rejected this submission, despite the fact, as pointed out to us, that the opponent, besides being a principal party to the conversation, had also listened to the recorded conversation after the tape had been made available to him and his representatives during the course of the trial and also had had access to the transcript of the tape. In our opinion, as a matter of construction, the section does not apply in the circumstances. The recorded conversation was a 'private conversation' as defined in s3 of the Act and the opponent and Elomari were each a 'principal party' to it. In our opinion the section does not apply where the 'person called to give the evidence' is a 'principal party' to the private conversation. The conversation could not be said to 'come to the knowledge' of such a party. He has knowledge of the private conversation directly and contemporaneously as a participant in it. The person contemplated by the section is one who acquires knowledge of it other than as a participant in it. It would apply to someone overhearing the conversation or acquiring knowledge of it in some way other than through the use of a listening device. Accordingly, in our view, even if leave were to be granted, the claimant's appeal in respect of the trial judge's order, based upon the state of the evidence at the time, could not succeed." 22 This passage was followed by David Kirby J in The Queen v Eade (2000) 118 A Crim R 449 at 459-460. 23 I apply the view expressed by the Court of Appeal of the concept of a private conversation coming to the knowledge of a party to the conversation. In the terms of subsection 13(1), the conversation did not come to the knowledge of the plaintiff as a result, direct or indirect, of the use of the listening device. It was fully known to her because she was present to hear it. Subsection 13(1) has no impact and there is no need to address exceptions in subsection (2). Section 13 has no operation to exclude the evidence. 24 Section 138 of the Evidence Act 1995 provides a further test to which the tender is subject. I set out the terms of subs.138(1) and (3): (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. (3) Without limiting the matters that the court may take into account under subsection (1), it is to take into account: (a) the probative value of the evidence, and (b) the importance of the evidence in the proceeding, and (c) the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding, and (d) the gravity of the impropriety or contravention, and (e) whether the impropriety or contravention was deliberate or reckless, and (f) whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, and (g) whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention, and (h) the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law. 25 It can be seen from what I have said earlier that the tape is a recording obtained in contravention of the Listening Devices Act 1984 section 5 and the transcript was obtained in consequence of that contravention. Neither the tape nor the transcript is to be admitted, having regard to the provisions of section 138(1), unless it is subjected to and passes the weighing test provided for by subsections (1) and (3). 26 It can be seen from the text of subsection (1) that evidence may be obtained improperly or in consequence of an impropriety without there being any breach of a law, and that the concept of what is improper or what is an impropriety is a different concept to disobedience of statute law. In terms of ordinary behaviour and conduct when engaged in negotiations I see no room to doubt that it is an impropriety to make a secret recording of a conversation bearing on some business interest or other important interest, such as in this case entitlements to interests in a deceased person's estate. Such behaviour is of an altogether different kind to making notes during the course of the conversation where others present can observe that notes are being taken, and it is also altogether different to preparing for one's own use after a conversation a memorandum or note of what one then remembers took place. 27 In ordinary business and social behaviour there is, in my understanding, a very strong expectation that there will not be a secret recording of a conversation but that any process of recording will be revealed, so as to give those recorded an opportunity to decide whether or not they will participate. If I conjure up for myself what could be expected to happen at the meeting of 10 May 2001 or what could be expected to happen in ordinary and reasonable conduct of persons in this community participating in a business meeting of any kind, I feel no doubt that discovery in the course of a meeting that a secret recording was being made would disrupt proceedings, with a high likelihood that the discovery would lead to the immediate withdrawal of those not involved in making the recording. The view of ordinary reasonable people in Australian society that behaviour of a particular kind is an impropriety is what makes it an impropriety. What the community thinks about secret recordings is, in my view, altogether clear and furnishes the explanation for the enactment of legislation such as the Listening Devices Act, notwithstanding the availability of a quite different view of the significance of making secret recordings. 28 I understand, both from such events as the enactment of the Listening Devices Act and also from my general understanding of values and behaviour in the community of which I must take notice, that such conduct is not tolerated and is regarded as an extreme impropriety. The nature of the breach of an Australian law and the nature of the impropriety have a part in the weighing exercise and in appraisal of the undesirability of admitting evidence to which subsection 138 (1) refers. I am of the view that the tape is evidence which was obtained improperly and that the transcript is evidence which was obtained in consequence of an impropriety. 29 I turn to address the elements of subsection (3). Under para(a) (which relates to the probative value of the evidence) the tape and the transcript, of course, have high probative value of the events which they record, but those in turn, having regard to the passages which I have earlier set out, do not appear to me to have high probative value for the plaintiff's case taken as a whole, to the effect that Mrs Florence Hardman did not receive adequate advice. The references to market value in the transcript are not well spelt out, and they are not the whole of the material to be found in the transcript about the explanation of how the price was struck and the evolution of the transaction. The passages I have seen never achieve any high state of clarity on those matters. Consideration of the probative value of the evidence does not, in my view, weigh strongly in favour of the admission of the material. The observations I have made thus far deal also with paragraph (b), the importance of the evidence in the proceedings. 30 Paragraph (c) directs attention to the nature of the cause of action and to the subject matter of the proceeding, and indeed they are of considerable importance. 31 Paragraph (d) directs attention to the gravity of the impropriety or contravention and I regard them both as quite serious departures from proper behaviour. It is plain that the impropriety and contravention were quite deliberate. 32 I am not aware of any relevant operation of the International Covenant on Civil and Political Rights referred to in paragraph (f) and treat it as neutral. 33 In the circumstances it seems to me to be quite unlikely that there will be any other proceedings in relation to contravention of the Listening Devices Act referred to in (g). 34 With respect to paragraph (h) there is really no difficulty whatever of obtaining the evidence in another way if, indeed, it has any real significance. For example, Mr Richard Watson, solicitor, could give evidence of his recollections or notes of any part of the events at the meeting which had any true significance. The plaintiff too could give such evidence as she is able to give based on recollection of any part of the events at the meeting which have significance. 35 In my view in carrying out the weighing exercise referred to in subsection 138 (1) I should reject the tape and the transcript and I so rule. 36 The evidence dealing with how the transcript was produced from the tape is far from adequate to justify its admission into evidence, but that is a problem which the plaintiff might be able to overcome with some further evidence. Then too, before rejecting the transcript on that ground I would address whether the correctness of the transcript is genuinely in dispute. I have left these aspects of the objection unexamined. ********** Last Modified: 04/12/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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