ASIC v Rich [2005] NSWSC 1031

New South Wales Supreme Court

CITATION : ASIC v Rich [2005] NSWSC 1031

HEARING DATE(S) : 26, 27, 28 September 2005

JUDGMENT DATE : 13 October 2005

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : See under heading "Overall conclusions"

CATCHWORDS : EVIDENCE - admissibility of business records - admissibility under s 1305 of the Corporations Act - admissibility of judgment - discretionary exclusion of evidence - no issue of general principle

Corporations Act 2001 (Cth), s 1305 LEGISLATION CITED : Evidence Act 1995 (NSW), ss 69, 91, 135

ASIC v Rich [2005] NSWSC 417 ASIC v Rich [2005] NSWSC 471 Regina v Adler [2005] NSWSC 274 CASES CITED : Ringrow Pty Ltd v BP Australia Ltd [2003] FCA 933 Roach v Page (No 11) [2003] NSWSC 907 Young v Coupe [2004] NSWSC 546

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

THURSDAY 13 OCTOBER 2005

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS JUDGMENT 1 HIS HONOUR: This judgment relates to the admissibility of documents in MFI 151, and certain pages of exhibit CRA-2 to the affidavit of Craig Richard Allsopp sworn on 4 July 2005. 2 At the hearing on 11 August 2005 ASIC tendered a folder of documents, which I marked for identification as MFI 151 (T 5648). At the invitation of senior counsel for the defendants, senior counsel for ASIC made a statement of the relevance of the documents at pages 8-12, 43-50 and 52-82 of MFI 151, and of the CD-ROM at Tab 12 (T 5655-5657; 5660-1). 3 Since that was the last hearing day before the court's departure to take evidence in London, I heard submissions as to the admissibility of the documents tendered as part of MFI 151 that might be relevant to international issues and therefore to the London evidence. Senior counsel for the defendants informed the court (T 5648) that the documents relevant to international issues were: · pages 5-7; · pages 22-29; · the document at pages 226-228; · the document at pages 235-236; · the whole of Tab 8. 4 The defendants did not specifically object to pages 22-29, 226-228, or 235-236 - these last two pages being tendered on a limited basis (T 5649-5650). They informed the court that they were still receiving instructions in relation to the document at pages 5-7, and they were not in a position to deal with the Tab 8 documents but that would not affect the proceedings in London. In London, senior counsel for ASIC made a statement to the court about the relevance of the document at pages 5-7 and senior counsel for the defendants informed the court that his clients formally objected to the tender of those pages but in light of my rulings on business records they had nothing additional to say (UK T 394-397; 170-171). 5 As was made clear at the hearing on 27 September 2005 in Sydney, the defendants' position, as explained in London, was in fact their general position with respect to MFI 151. By "not objecting" to the tender of specified documents in MFI 151 they intended to convey only that they accepted that the tender would succeed upon the application of the reasoning in my 5 May judgment (ASIC v Rich [2005] NSWSC 417) with respect to the business records provisions of the Evidence Act, reasoning that the court had adopted notwithstanding their submissions to the contrary. Tender of MFI 151 documents under s 1305 6 The court returned to consider the tender of the documents in MFI 151 on 26, 27 and 28 September 2005. Senior counsel for ASIC informed the court that his client tendered the documents in MFI 151 both under the business records provisions of the Evidence Act and also (except as otherwise specified) under s 1305 of the Corporations Act. He specified that the following documents were not tendered under s 1305 but only under the business records provisions: pages 83-97 and the documents under Tabs 2, 3, 4, 6, 7, 8, 9 and 10 (T 5773.39-42). ASIC pressed the tender under s 1305 as well as under the business records provisions for two reasons: first, that a book kept by a body corporate and admissible under s 1305(1) is prima face evidence of any matter stated or recorded in the book; and secondly, rulings as to admissibility under s 1305 might provide some protection to ASIC if my judgment on the admissibility of business records were to be overturned on appeal. 7 Submissions proceeded on the basis that the defendants formally objected to the receipt into evidence of the tendered documents both under the business records provisions and (to the extent that it was relied upon by ASIC) s 1305; but the defendants accepted that in general, my rulings and the reasoning in my judgment of 5 May 2005 would lead to the admission of the documents in MFI 151, and that it would be up to them to make any particular submissions if they wished to assert that the tender was not governed by the 5 May judgment (T 5764.33-44; T 5765.20-22). 8 With one exception, the defendants did not make any particular submissions about the admissibility of the MFI 151 documents under the business records provisions of the Evidence Act. I confirm that, as anticipated by senior counsel for the defendants, my view (and my ruling) is that the documents in MFI 151 are admissible under the business records provisions of the Evidence Act for the reasons given in my 5 May judgment. The matter specifically addressed by the defendants and requiring special mention is page 234, which is admissible as a business record of Ernst & Young for the reasons given below. 9 The defendants challenged the application of s 1305 to various specified documents, by written submissions in DS 90 and oral submissions at the hearing on 27 September. During the course of the hearing on that day, I heard argument, made rulings and delivered ex tempore judgments in respect of the application of s 1305 to various particular documents. The outcomes were as follows: · s 1305 was held to apply to the documents at pages 1-4 (T 5781.8-9); · the defendants conceded that s 1305, as construed in my 5 May judgment, applied to the documents at pages 5-7, although they maintained their formal objection (T 5777.12); · s 1305 was held not to apply to the tender of pages 8-12, and those pages were therefore admissible only under the business records provisions; · s 1305 was held to apply to the tender of pages 13-34 (T 5792). 10 As to the other documents specifically mentioned in DS 90 and addressed orally by the defendants: · ASIC did not press the application of s 1305 to the tender of pages 235-275 (T 5773.42, 5799.38); · nor did ASIC press the application of s 1305 to the documents at pages 170-176, 177-183, 184-232, 234, 235, 276-300 and 301-322 (T 5800.3-41); · I held that s 1305 applied to the document at 233 (T 5806.8-11). Other rulings relating to MFI 151 11 It was conceded by ASIC that the creditor communications behind Tabs 2, 6 and 7 were tendered on the same limited basis as other creditor communications. 12 The defendants resisted the tender of the judgment by Dunford J in Regina v Adler [2005] NSWSC 274, on grounds set out in DS 91 and oral submissions at T 5843ff and T 5850ff. I ruled (T 5851.27-31) that Dunford J's judgment would be received but its use would be limited to proving the fact of the conviction of Mr Adler and the fact that Dunford J made the statements in paras 38, 39 and 40 of the judgment, but not to prove the truth of those assertions. 13 The material behind Tab 8, which includes a statement that I have been asked not to read at this stage, relates to Ms Kekalainen-Torvinen. I was informed on 27 September that there was an issue between the parties as to the adequacy of ASIC's response to a notice to produce which is relevant to this matter (T 5843). I agreed to defer the tender of this material. It remains outstanding. Application under s 135 in respect of certain documents 14 In DS 90, para 6c, and in oral submissions on 27 September, the defendants contended that I should generally reject the tender of MFI 151, and specifically reject the tender of certain identified documents in MFI 151, under s 135 of the Evidence Act. The identified documents were pages 35-39, the documents behind Tab 4, and page 234. There was also an objection under s 135 to the documents at pages 99-105 of exhibit CRA-2 to Mr Allsopp's affidavit of 4 July 2005. 15 My judgment of 5 May addressed, at length, the admissibility of 10 categories of documents selected for argument from ASIC's tender. The judgment then considered the defendants' submissions that the documents or some of them should be excluded under s 135 of the Evidence Act (see [322]-[388]). The defendants' contentions on that occasion are similar to their present contentions about the documents in MFI 151, particularly in that they drew attention to some difficulties and uncertainties surrounding particular documents (including uncertainties about the purpose of documents and the circumstances of their preparation), and the fact that the authors of documents were not to be called to explain them (see DS 90, para 6c). While the whole of my 5 May judgment on s 135 has some relevance to the issues before me now, I draw particular attention my findings that: · unfair prejudice did not arise out of the combination of the fact that the documents were rendered admissible by statute in circumstances that may have cast a forensic burden of explanation on the defendants, and the presence of some particular deficiencies in certain documents (which, however, did not render those documents inadmissible): at [382]; · while there were problems concerning certain documents which might make their assessment obscure and difficult, that did not establish a danger that the evidence might be misleading or confusing: at [385]; · it would be unwarranted and premature to make a judgment, prior to hearing all of ASIC's evidence, that the time taken up in dealing with the documents under challenge would be an undue waste of time: at [387]. 16 On 27 September 2005 senior counsel for the defendants referred me again to Ringrow Pty Ltd v BP Australia Ltd [2003] FCA 933, Roach v Page (No 11) [2003] NSWSC 907 and Young v Coupe [2004] NSWSC 546. But I considered these cases when preparing my 5 May judgment. The specific passages cited by senior counsel for the defendants on 27 September do not alter my analysis or conclusions, or the application of that reasoning to the documents presently under consideration.