New South Wales Supreme Court CITATION : Grace v Grace [2010] NSWSC 1516 HEARING DATE(S) : 19 November 2010 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 19 November 2010 DECISION : Decline to grant the leave sought CATCHWORDS : EVIDENCE – Witnesses – adverse witnesses – whether leave should be granted under (NSW) Evidence Act 1995, s 38 LEGISLATION CITED : (NSW) Evidence Act 1995 s 38, s 192 CATEGORY : Procedural and other rulings CASES CITED : Commercial Union Assurance Co of Aust Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Jones v Dunkel (1959) 101 CLR 298 David Alexander Grace (plaintiff) Deborah Sharon Grace (first defendant) Julienne Grace (second defendant) PARTIES : Nevilda Holdings Pty Ltd (prov liq'r appted) (third defendant) Nevilda Investments Pty Ltd (prov liq'r appted) (fourth defendant) Dutchie Pty Ltd (sixth defendant) Phoenix Rising Investments Pty Ltd (seventh defendant) FILE NUMBER(S) : SC 06/259566 COUNSEL : D Williams SC w S Goodman (plaintiff) A Moses SC w D Stewart (first, second & seventh defendants) SOLICITORS : James Tuite & Associates (plaintiff) Clinch Long Letherbarrow Pty Ltd (first, second & seventh defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Friday, 19 November 2010 2006/259566 David Alexander Grace v Deborah Sharon Grace & Ors JUDGMENT (ex tempore) 1 HIS HONOUR: In the course of her cross-examination, the first defendant Deborah Sharon Grace gave evidence to the effect that, until at least some time in 2007, she had believed that the trustees of the Nevilda Investments Pty Ltd Superannuation Fund were Nevilda Holdings Pty Ltd (as a corporate trustee), and her mother the second defendant Dr Julienne Grace, herself and her brother the plaintiff David Alexander Grace (as individual trustees). She gave evidence that this belief was formed on the basis of advice given to her by an accountant, the present witness Mr Ashton, to the effect that as a result of the amendments to superannuation laws in the late 1990s, it was required that all members of a self-managed superannuation fund be trustees of that fund. She said that Mr Ashton had told her, and at one point I think she said he had told her "many times", that the three individuals as well as the corporate trustee were trustees of the superannuation fund. 2 Mr Ashton was called to give evidence by the defendants, and his affidavit sworn 29 May 2010 was read. In paragraph 48, he said: The trustees, as I understand it, for the NISF were the corporate trustee, being Nevilda Holdings, and each individual member, being Julienne, Deborah, David. 3 In Paragraph 49, he continued: I came to this view through my knowledge of superannuation regulations, the requirement that members had to be trustees, my knowledge of the Fund, and my understanding that it had always operated on this basis. 4 Objection was taken to those paragraphs and they were rejected, but leave to supplement was granted. In due course, in the course of his evidence-in-chief, Mr Ashton said that he had understood the trustees of the superannuation fund to be Nevilda Holdings, Dr Grace, Deborah and David, and that he had gained that understanding from Dr Grace, who had told him as much. 5 Shortly before the adjournment last night I asked him, for the purpose of clarification, whether he had been told that by Dr Grace, or whether he had told it to Dr Grace. He confirmed it was something he was told by Dr Grace, not the reverse [T1045.33-35]. Needless to say, that question was asked because the potential discrepancy had become apparent. 6 In the course of his cross-examination today, by Mr Williams SC for the plaintiff, Mr Ashton gave evidence that he did not tell Dr Grace or Ms Deborah Grace that the trustees of the superannuation fund were the corporate trustee and the three individuals. In effect, he denied that he had provided that information, or advice, to the defendant. In that respect, his evidence in cross-examination contradicts the evidence given by the first defendant at least, and contradicts the case which the defendants seek to make. 7 Mr Moses SC for the defendants now renews his application for leave, under (NSW) Evidence Act 1995, s 38(1) for leave to question Mr Ashton as if cross-examining him – this time, pursuant to s 38(1)(a), on the basis that evidence given by Mr Ashton is unfavourable to the defendants. 8 I am satisfied that, in the respect to which I have referred, the evidence given by Mr Ashton is unfavourable to the defendants. That is a precondition to a grant of leave, but not determinative that leave should be granted. In considering whether to grant the leave sought, I am required inter alia to have regard to the factors referred to in Evidence Act s 192(2). 9 The first of those factors is the extent to which granting leave would be likely to add unduly to or to shorten the length of the hearing. I am amply satisfied that granting such leave will not shorten the length of the hearing. It will clearly add somewhat to it. If Mr Moses is permitted to cross-examine on this topic, then fairness will require that Mr Williams be permitted to further cross-examine on it also. 10 The second relevant factor is the extent to which to grant leave would be unfair to a party or to a witness. It seems to me that this was a topic which, if it was not within the scope of the leave to supplement granted in respect of paragraphs 48 and 49 of the affidavit – and I think it was at least very close to that – it was certainly one in respect of which leave to supplement, had it been sought, would have been granted. It was a matter on which it was obvious enough, in the course of examination-in-chief, that this witness might be able to corroborate (or, alternatively, to contradict) the defendants' evidence. 11 It is well-established that, by analogy with the rule in Jones v Dunkel (1959) 101 CLR 298, a party calling a witness fails to ask him or her relevant questions for fear of eliciting adverse evidence at its peril [Commercial Union Assurance Co of Aust Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389]. It would defeat this rule if such a party could refrain from asking a question in chief, have the adverse evidence elicited in cross-examination, and then obtain leave to conduct the re-examination by way of cross-examination. 12 I do not see anything materially different about what has happened here than happens in virtually every effective cross-examination – namely, that the cross-examiner elicits from the opposing witness evidence which to some extent can be used to impugn the case of the party calling that witness. I do not think that s 38 was intended to produce the result that when a successful cross-examination elicits evidence adverse to the party calling a witness, the party calling the witness could then obtain leave to further cross-examine, so as to endeavour to undo the damage done in cross-examination. While I accept that s 38 is wider than the common law rule about hostile witnesses, some vestiges of what was contemplated by the common law remain. In any event, they continue to inform the exercise of the discretion. Had I formed the impression that Mr Ashton was doing his best to help the plaintiff and as little as possible to help the defendants, or that his evidence had an appearance of incredibility or fabrication in this respect, I probably would not have hesitated to grant the leave sought. 13 The next relevant factor is the importance of the evidence in relation to which the leave or permission is sought. 14 While a great deal of time has been devoted in the course of the proceedings to the issue of the identity of who the defendants believed were the trustees of the superannuation fund, and while I accept that it is of some significance, it is largely of importance on questions of credit rather than on substantive issues in the case. It is not right at the periphery, but it is also well away from the core issues in the proceedings. 15 The nature of the proceedings are civil, and while the court has powers to adjourn the hearing or make other orders or give directions in relation to the evidence I do not see any need, necessity, or desirability in doing so. 16 For the reasons I have given, but particularly because I do not think it was ever contemplated that s 38 would permit a party calling a witness to undermine concessions extracted in cross-examination in otherwise unremarkable circumstances, I decline to grant the leave sought. ********** 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. 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