New South Wales Supreme Court CITATION : Australian Securities and Investments Commission v Macdonald (No 10) [2009] NSWSC 53 HEARING DATE(S) : 13 February 2009 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 13 February 2009 DECISION : Tender rejected except for reports relevant to other issue with limitation of use to that issue under s 136 of the Evidence Act. CATCHWORDS : EVIDENCE - Admissibility and Relevancy - Application in 12th defendant's case to tender 87 financial market analysts' reports relevant to an assessment of the circumstances that existed at the time it is alleged by the Australian Securities and Investments Commission that it was in breech of provisions of the Corporations Act 2001 (Cth) - Reports not put to expert merchant banker called by ASIC who opined on 69 other reports and who gave his evidence in October 2008 - Evidence in case completed except for 12th defendant's tender of documents including the reports - ASIC had initially treated the reports as relevant to the case - Whether in the circumstances it was open to the 12th defendant to challenge underlying assumptions of the expert by the tender of the reports Browne v Dunn (1894) 6 R 67 - Whether tender should be rejected or ASIC should be at liberty to re-open its case or present a case in reply by recalling the expert - Whether discretion should be exercised under the Evidence Act 1995, s 135 - Relevance of some reports to another issue Corporations Act 2001 (Cth) LEGISLATION CITED : Civil Procedure Act 2005 Evidence Act 1995 CASES CITED : Browne v Dunn (1894) 6 R 67 Australian Securities and Investments Commission (Plaintiff) Peter Donald Macdonald (First Defendant) Peter James Shafron (Second Defendant) Phillip Graham Morley (Third Defendant) Michael Robert Brown (Fourth Defendant) Michael John Gillfillan (Fifth Defendant) PARTIES : Meredith Hellicar (Sixth Defendant) Martin Koffel (Seventh Defendant) Geoffrey Frederick O'Brien (Eighth Defendant) Gregory James Terry (Ninth Defendant) Peter John Willcox (Tenth Defendant) ABN 60 Pty Ltd (Eleventh Defendant) James Hardie Industries NV (Twelfth Defendant) FILE NUMBER(S) : SC 1490/2007 Mr A Bannon SC/ Mr R Beech-Jones SC/ Ms D Hogan-Doran/ Ms S Pritchard / Ms J Single/ Mr A Kuklik (Plaintiff) Mr S Finch SC/ Mr D Studdy SC/ Mr D Mackay (First Defendant) Mr B Walker SC/ Mr M Holmes QC/ Mr R Lancaster/ Mr N Owens (Second Defendant) Mr B Oslington QC/ Mr R Dick/ Mr N Bender (Third Defendant) COUNSEL : Mr T Bathurst QC/ Mr R Whitington QC/ Mr R Hollo/ Mr R Hardcastle/ Mr I Colquhoun (Fourth to Seventh Defendants) Mr P Wood/ Mr M Henry (Eighth Defendant) Mr R McHugh SC/ Mr S Nixon (Ninth Defendant) Mr T Jucovic QC/ Mr R Scruby (Tenth Defendant) Mr I Pike (Eleventh Defendant) Mr A Meagher SC/ Ms K Morgan (Twelfth Defendant) Clayton Utz (Plaintiff) Minter Ellison (First Defendant) Middletons (Second Defendant) Henry Davis York (Third Defendant) SOLICITORS : Atanaskovic Hartnell (Fourth to Seventh Defendants) Arnold Bloch Leibler (Eighth Defendant) Blake Dawson (Ninth Defendant) Kemp Strang (Tenth Defendant) Baker & McKenzie (Eleventh Defendant) Mallesons Stephen Jaques (Twelfth Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J 13 FEBRUARY 2009 1490/07 AUSTRALIAN SECURITES AND INVESTMENTS COMMISSION v MACDONALD (NO 10) EX TEMPORE JUDGMENT 1 James Hardie Industries NV, the twelfth defendant, seeks to tender 87 financial market analysts' reports covering the period 12 November 1998 to 31 July 2003. 2 The Australian Securities and Investments Commission, the plaintiff, called Alan John Humphris, a merchant banker. He examined 63 analysts' reports for the purpose of his first report of 17 March 2008 and a further six reports for the purpose of his supplementary report of 2 September 2008. The analysts' reports are material to an assessment of the circumstances that existed at the time that it is alleged by ASIC that JHINV was, in various respects, in breach of provisions of the Corporations Act 2001 (Cth). 3 Mr Humphris gave evidence in October 2008. He was cross-examined on behalf of JHINV. None of the 87 reports now sought to be tendered were put to him. 4 JHINV submits that all bar two of the reports were available to ASIC and it could have put the reports to Mr Humphris. It says that the other two reports could have been obtained under ASIC's compulsory powers or by subpoena. It says that it was not obliged to cross-examine Mr Humphris on the reports and can challenge the assumptions underlying Mr Humphris's evidence by tendering these other analysts' reports. 5 I do not agree. If JHINV proposed to rely on the 87 reports to challenge the underlying assumptions upon which Mr Humphris's reports were based, albeit that initially ASIC treated the documents as relevant to the case, it was nonetheless incumbent upon JHINV to put the reports to him in cross-examination. 6 In my view, the failure to do so in the circumstances of this case debars JHINV from tendering the reports now. This is a classic Browne v Dunn (1894) 6 R 67 situation and it is now too late, after the conclusion of the oral evidence in this case over an extended period, to take alternative courses such as allowing ASIC to re-open its case to recall Mr Humphris. 7 The application of s 56 of the Civil Procedure Act 2005 and its requirement to facilitate the just, quick and cheap resolution of the real issues in the case enforces my view. ASIC should not now be placed in a position of seeking to re-open its case to have Mr Humphris consider the reports or seek to present a case in reply by recalling Mr Humphris. 8 If the common law rule in Browne does not apply, I would exercise my discretion under s 135 of the Evidence Act 1995 and refuse to admit the reports on the basis that their probative value is outweighed by the danger that the evidence might be unfairly prejudicial to ASIC or cause or result in undue waste of time. There is a limit to the time available to me to write a judgment in this case. I am rostered back to normal duties in May 2009 and must complete the judgment before then. It would take considerable time for ASIC to have Mr Humphris analyse the additional analysts' reports preparatory to his giving further evidence. 9 JHINV submits that some of the reports are relevant to a different issue - JHINV's sale of its gypsum business in the United States of America. I will allow the tender of those analysts' reports that go to that issue, but will limit their use to that issue. 10 Subject to my rulings, I order that the documents in the twelfth defendant's list of documents for tender, other than the financial market analysts' reports, to the extent that they are not already exhibits, be admitted as exhibits by entering their digital content in the court record database. I order that such of the market analysts' reports as are relevant to the twelfth defendant's sale of its gypsum business in the United States of America be admitted as exhibits by entering their digital content in the court Record database but that, pursuant to s 136 of the Evidence Act 1995, their use be limited to that issue. 11 I order that the digital content of my reasons for judgment be entered on the court record database after their inclusion in Caselaw. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.