ASIC v Rich [2005] NSWSC 939

New South Wales Supreme Court

CITATION : ASIC v Rich [2005] NSWSC 939

HEARING DATE(S) : 11 August 2005 (and written submissions)

JUDGMENT DATE : 30 September 2005

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : See under heading "Conclusions"

CATCHWORDS : EVIDENCE - admissibility of expert opinion evidence - scope of valuation expertise of forensic accountant - whether opinions based on expertise - no issue of general principle

LEGISLATION CITED : Evidence Act 1995 (NSW), ss 79, 135, 136

ASIC v Rich [2005] NSWCA 152 ASIC v Rich [2005] NSWSC 149 ASIC v Rich [2005] NSWSC 650 CASES CITED : ASIC v Rich [2005] NSWSC 940 ASIC v Rich [2005] NSWSC 999 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Australian Securities and Investments Commission (P) PARTIES : John David Rich (D1) Mark Alan Silbermann (D4)

FILE NUMBER(S) : SC 5934/01

R B S Macfarlan QC with J P A Durack SC (P) COUNSEL : D L Williams SC with M J Steele (D1, D4)

Georgina Hayden, Solicitor for Australian Securities and Investments Commission (P) SOLICITORS : Joanne Kelly, Solicitor (D1, D4)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

FRIDAY 30 SEPTEMBER 2005

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS JUDGMENT

HIS HONOUR: Introduction 1 In a judgment delivered on 8 July 2005 (ASIC v Rich [2005] NSWSC 650), I carried out a "paragraph-by-paragraph" review of Mr Carter's principal forensic accounting report dated 31 May 2002, ruling (with a few specified exceptions) on whether each sentence of the text of that report would be received into evidence, in light of the judgment of the Court of Appeal delivered on 20 May 2005 (ASIC v Rich [2005] NSWCA 152). Mr Carter prepared some supplementary affidavits and reports, to which the defendants also objected. Although I received detailed submissions on some parts of the supplementary materials, I decided to give the parties the opportunity to reconsider their positions on the supplementary materials in light of my decisions and reasoning with respect to the principal report (8 July 2005 judgment, at [280]). They did so, and provided me with further written submissions, on the basis that I would make my decision on the points they raised without additional oral argument. 2 Mr Carter's "supplementary materials" comprise the following: · affidavit of 16 December 2002 and accompanying report dated 13 December 2002; · affidavit of 14 April 2004; · affidavit of 23 July 2004; · affidavit of 8 September 2004; · affidavit of 22 October 2004; · affidavit of 2 November 2004; · affidavit of 29 November 2004 and accompanying report; · affidavit of 21 December 2004 and accompanying report. ASIC has provided the court with a list of the parts of the supplementary materials that it wishes to press (AS 87). 3 The principal written submissions bearing on the issues under consideration are: · Defendants' objections to the Carter Report dated 3 June 2005 (DS 69); · ASIC's response to the defendants' detailed objections to the Carter Report (AS 79 - received in several tranches); · Defendants' objections to the reports and affidavits of Mr Carter pressed by ASIC in AS 87, dated 29 July 2005 (DS 84); · ASIC's response to DS 84 (AS 95); · Defendants' reply to AS 95 (DS 86). 4 When it became evident that decisions would be necessary with respect to certain parts of the supplementary materials with international elements, prior to the court commencing to take evidence in London on 24 August 2005, and that there would be no time to deal fully with the evidentiary status of the whole of the supplementary materials by then, the defendants identified (in DS 88) the parts of the supplementary materials upon which rulings were needed before our departure for the United Kingdom. They are: the whole of the material pressed by ASIC in the affidavit of 16 December 2002 and the accompanying report dated 13 December 2002; paras 5 to 7 of the affidavit of 14 April 2004; and the whole of the material pressed by ASIC in the affidavit of 8 September 2004. After considering that material and the submissions on it, on 11 August 2005 I announced my decisions, reserving my reasons. 5 The present judgment provides my reasons for the rulings on admissibility and discretionary exclusion that I have made with respect to the international materials identified in DS 88. I shall deliver a separate judgment making rulings with respect to the balance of the supplementary materials pressed by ASIC in AS 87 (see ASIC v Rich [2005] NSWSC 999). 6 The defendants' objections to the material identified in DS 88 include objections to admissibility, submissions designed to invoke the court's discretion to exclude evidence under s 135 of the Evidence Act, and submissions urging the court to reject ASIC's application for leave to read evidence filed and served out of time. Although, strictly speaking, leave is required in respect of all three of Mr Carter's affidavits related to international matters, my view is that there is no plausible basis for denying leave in respect of the December 2002 affidavit, and so that issue relates only to the April and September 2004 evidence. The parties' submissions on the question of leave to rely on evidence filed and served out of time are related to their submissions concerning ASIC's application to amend its pleading, which I also rejected on 11 August, reserving my reasons. I have decided that the clearest way to present the reasons for my decisions is to address the questions of admissibility and discretionary exclusion of evidence in the present judgment, and to deal with the application for leave to rely on evidence (the affidavit material and the underlying documents) filed and served out of time in a separate judgment, which also considers the question of leave to amend the pleading: ASIC v Rich [2005] NSWSC 940. Affidavit of 16 December 2002 and accompanying report dated 13 December 2002