New South Wales Supreme Court CITATION : Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1046 HEARING DATE(S) : 24 September 2008 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 24 September 2008 DECISION : PX04 admitted. Pages 56.16 to 58.09 rejected as against defendants other than Mr Yates. CATCHWORDS : EVIDENCE – application for leave to adduce evidence given by a defendant in earlier interlocutory hearing – where evidence to be adduced is an admission of defendant – relevant considerations for granting leave – where some defendants in current proceeding were not parties to earlier proceeding– whether the hearsay and/or opinion rules apply – where admission is tendered against third parties LEGISLATION CITED : (NSW) Evidence Act 1995, ss 81(1), 83 (1) (NSW) Uniform Civil Procedure Rules, rr 31.8, 31.9 CATEGORY : Procedural and other rulings TEXTS CITED : Ritchie et al, Ritchie's Uniform Civil Procedure NSW (2005) LexisNexis Butterworths Carbotech-Australia Pty Ltd (P1) Ground Consolidation Pty Ltd (P2) Minova International Pty Ltd (P3) Ian Kenneth Yates (D1; XD1 in XC1; XD2 in XC2; XP1 in XC3) Donna Yates (D2; XD2 in XC1; XD3 in XC2; XP2 in XC3) Eligild Pty Ltd (D3; XD3 in XC1; XD4 in XC2; XP3 in XC3) Ron Godfrey Nielsen (D4; XD4 in XC1; XD5 in XC2; XP4 in XC3) SES Resources Pty Ltd (D5; XP1 in XC1; XD6 in XC2) PARTIES : SES 2005 Pty Ltd (D6; XP2 in XC1; XD7 in XC2) Wombat Holdings (NSW) Pty Ltd (D7; XD5 in XC1; XD8 in XC2; XP5 in XC3) Global Resins Pty Ltd (D8; XP3 in XC1; XD9 in XC2; XD3 in XC3) SES International Ltd (D9; XP4 in XC1; XD10 in XC2) Mark Weston (D10; XD6 in XC1; XD1 in XC2; XD6 in XC3) Era Polymers Pty Ltd (D11; XD7 in XC1; XP1 in XC2) Era Polymers Holdings Pty Ltd (D12; XD8 in XC1; XP2 in XC2) Geoffrey David Mellon (D13; XD9 in XC1; XD11 in XC2; XD9 in XC3) SES Holdings Plc (D15; XP5 in XC1; XD13 in XC2) FILE NUMBER(S) : SC 3813/05 Mr W G Muddle SC w Mr S A Goodman & Mr J A Arnott (Ps) Mr I K Yates (in person) (D1-3) COUNSEL : Mr A J Bulley w Mr C J M Palmer (D4, 7) Mr J K Kirk (D5, 6, 8, 9, 15) Mr C D Freeman (D11, 12) Clayton-Utz (Ps) SOLICITORS : Cameron & Myers (D4, 7) Allens Arthur Robinson (D5, 6, 8, 9, 15) Photios Vouroudis & Co (D11,12) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Wednesday 24 September 2008 3813/05 Carbotech Australia Pty Ltd & ors v Ian Kenneth Yates & ors JUDGMENT (ex tempore) 1 HIS HONOUR: The plaintiffs seek leave pursuant to (NSW) Uniform Civil Procedure Rules ("UCPR"), r 31.8(3), to adduce in evidence in this trial, against all the defendants, part of the evidence given by the first defendant Mr Yates, in an interlocutory hearing before Windeyer J on 30 June 2006 – namely pages 56.16 to 58.09 of the transcript, which is PX04 in these proceedings, but admitted only at this stage as against Mr Yates. 2 The substance of the evidence given by Mr Yates in that passage is that he conceded having provided data and samples to ERA without the consent of anyone from Minova, Carbotech or Ground Consolidation, and that he did so dishonestly. 3 UCPR, r 31.8, provides, by sub-rule 3, that – subject to sub-rules 1 and 2, which are not relevant for present purposes – "evidence taken at a hearing may not be used as evidence in any subsequent hearing in the same proceedings except by leave of the Court." The rule gives no indication as to the considerations which inform whether or not leave should be granted, and although the annotations in Ritchie's Uniform Civil Procedure NSW suggest otherwise, the rule is not limited in the same way as r 31.9 is to the proof of particular facts. However, if it is not an essential requirement to admissibility, it is at least a highly relevant factor, having regard to considerations of natural justice, whether or not the earlier hearing involved the same parties as the present proceedings. The evidence must be otherwise admissible (in the sense that it would have been admissible if given in the later hearing) and it ought to pertain to the same fact situation (see the cases referred to in Richie's, at [31.9.10]). 4 I am satisfied that the evidence is relevant because, although it is not by any means conclusive of the allegation that Mr Yates acted dishonestly, an admission of dishonesty is plainly a step along the way to persuading the Court that a conclusion of dishonesty should be drawn. It is relevant also to the case against the other defendants – which is a case of accessorial liability – because proving the dishonesty of the principal is an essential step in establishing the accessorial liability of the other defendants. 5 The proceedings before Windeyer J, involved an interlocutory application in respect of a discrete part of the case, in which the plaintiffs were the applicants, Mr Yates and his company Eligild were the respondents, some of the other defendants had not yet been joined, and the others were not represented on or affected by the interlocutory hearing, and were therefore not present when the relevant evidence was given, and did not have an opportunity to cross-examine Mr Yates in respect of it. It is thus at least a relevant consideration, telling against the admissibility of this evidence over objection, that the defendants other than Mr Yates and Eligild were not parties to the hearing in which the evidence was given. 6 The evidence is in the nature of an admission. If it were given orally before me it would not be inadmissible hearsay. However, the characterisation of certain of the conduct as dishonest would be an opinion. 7 I do not accept that the requirement that the evidence be otherwise admissible involves a requirement that it satisfy some exception to the hearsay rule on the basis that it was a previous representation, simply because it was made at an earlier hearing in the proceedings. In my opinion, the rule is intended to provide a means for treating evidence given at an earlier hearing in the proceedings as if it had been given in the later hearing. 8 Nonetheless, at least so far as it involves a conclusion that the conduct is dishonest, the evidence would offend the opinion rule. As against Mr Yates, that would not exclude its admissibility because of the operation of (NSW) Evidence Act 1995, s 81(1), which provides that the hearsay rule and the opinion rule do not apply to evidence of an admission. However, Evidence Act, s 83(1), provides that s 81 does not prevent the application of the hearsay rule or opinion rule to evidence of an admission in respect of the case of a third party, and sub-section (2) provides that such evidence may be used in respect of the case of a third party only if that party consents. In this case, the ERA defendants and the SES defendants are third parties for relevant purposes, and do not consent. In my opinion, therefore, this evidence is not "otherwise admissible" against the ERA defendants and the SES defendants. 9 For those two reasons then, first that the ERA defendants and SES defendants were not party to the hearing in which the subject evidence was given; and secondly, that the subject evidence is not "otherwise admissible" against those parties by reason of Evidence Act, s 83, I decline to grant leave under UCPR, r 31.8, for that evidence to be relied on as against parties other than Mr Yates. 10 There being no objection to the tender of the evidence contained in PX04, pages 19.6 to 17.50 against all defendants, that portion will be admitted as evidence against all defendants. I reject the tender of pages 56.16 to 58.09 against the defendants other than Mr Yates. ********** 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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