Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (ACN 113 114 832) (No. 2)

[2007] FCA 121

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (ACN 113 114 832) (No. 2)

[2007] FCA 121

EVIDENCE – Witnesses – Order in which parties may question witnesses – Where Applicant seeks to call witnesses and then conduct cross-examination – Where evidence includes transcripts of examinations – applicable principles – Evidence Act 1995 (Cth), ss 26, 193 – Australian Securities and Investments Commissions Act 2001 (Cth), s 77 – motion dismissed

Australian Securities and Investments Commission Act 2001 (Cth) – s 77
Evidence Act 1995 (Cth) – ss 26, 192

Australian Securities and Investments Commission v Rich (2006) 201 FLR 207 followed
GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15 approved

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v CITIGROUP GLOBAL MARKETS AUSTRALIA PTY LIMITED (ACN 113 114 832)
NSD 651 OF 2006

JACOBSON J
7 FEBRUARY 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 651 OF 2006

BETWEEN:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant
AND:	CITIGROUP GLOBAL MARKETS AUSTRALIA PTY LIMITED (ACN 113 114 832) Respondent

JUDGE:	JACOBSON J
DATE OF ORDER:	7 FEBRUARY 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The Plaintiff’s motion dated 29 January 2007 be dismissed.

2.Costs of the motion be costs in the cause.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 651 OF 2006

BETWEEN:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant
AND:	CITIGROUP GLOBAL MARKETS AUSTRALIA PTY LIMITED (ACN 113 114 832) Respondent

JUDGE:	JACOBSON J
DATE:	7 FEBRUARY 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1. The hearing of this matter is due to commence on 26 March 2007. At the hearing, ASIC will seek to tender into evidence under s 77 of the Australian Securities and Investments Commission Act 2001 (Cth), certain portions of eight transcripts of examination conducted by ASIC under s 19 of the ASIC Act. The persons who were examined are all employees of Citigroup, most of them occupying very senior positions in that company.

2. Citigroup requires ASIC to call those witnesses in the proceedings in order to comply with the provisions of s 77(b) of the ASIC Act. By notice of motion filed on 29 January 2007, ASIC seeks orders pursuant to s 26 of the Evidence Act 1995 (Cth) that the witnesses be examined as follows:

   ·ASIC to call each witness asking him only to identify himself;

   ·Citigroup then to examine each witness using non-leading questions;

   ·ASIC then to examine each witness and be permitted to ask leading questions;

   ·Citigroup then to re-examine each witness using non-leading questions.

3. In the course of argument today, Mr Stevenson SC for ASIC modified the terms of the orders that he seeks, apparently because he wishes to confine the right to cross‑examine the witnesses only in relation to the meeting that took place on the evening on 19 August 2005 which is described in [29] to [36] of the further amended statement of claim.  Mr Stevenson relies in particular upon what he submits to be a tension in the evidence of a number of people who attended the meeting, in particular in relation to a telephone conference call made to Mr Bartels.  That call is referred to in [34] of the further amended statement of claim.

4. Mr Stevenson submits that the witnesses are persons in respect of whom it is likely that Citigroup would have had conferences because they are employees of that company.  He does not by any means suggest that the witnesses will not give their evidence honestly, but he submits that the more efficient course for the conduct of the proceeding is that ASIC’s counsel be permitted to cross-examine the relevant witnesses as to the events which occurred on the evening of 19 August 2005.  He submits that the elucidation of the truth as to what occurred at that meeting will be better accommodated by the course that he proposes.

5. I have had the benefit of full argument this morning and I have also been assisted by full written submissions, in particular from Citigroup's counsel.  I do not need to set out my reasons in any great detail. 

6. I should mention here if I have not already done so, that in seeking the orders or directions that he does today, Mr Stevenson relies upon the provisions of s 26 of the Evidence Act which confers a discretion on the Court to, amongst other things, make such orders as it considers just in relation to the way in which witnesses are to be questioned and the order in which parties may question a witness.

7. In Australian Securities and Investments Commission v Rich (2006) 201 FLR 207 at [9], Austin J said that in his opinion s 26 of the Evidence Act is subject to s 192. As his Honour observed, s 192 provides that in granting leave or making a direction, the Court is to take into account, amongst other things, the powers which it has to make another order or to give directions in relation to evidence; see s 192(2)(e) of the Evidence Act. Austin J was of the view that the Court could not make a determination under s 26 of the Evidence Act as sought in that case because it was premature; see Rich at [15]. His Honour was of the view that the Court was not yet in a position to identify or assess all of the matters which must be taken into account in deciding whether to give a direction.

8. That seems to me to be the position in the present case. I will have, at the trial, power to make orders under a number of sections of the Evidence Act, including s 38 which deals with unfavourable witnesses, s 41 which deals with improper questions and, in particular, s 42 which deals with the power of the Court to limit or disallow the use of leading questions where, for example, a witness has an interest consistent with an interest of the cross-examiner or where the witness is sympathetic to the party conducting the cross-examination. It is unnecessary to address in these reasons the triggers for the operation of the powers conferred by those sections.

9. It does seem to me as Young J said in GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15 at 17 that the course of trials in NSW has always been for a party calling the witness to examine the witness in chief and for all other parties to test the evidence by cross-examination, and then for the person calling the witness to re-examine the witness.

10. I do not see that anything that has been put to me this morning justifies me, at present, in departing from the ordinary course. Whilst there appears to be power to do so under s 26, as I have said, it is in my view premature for any such order to be made. I think that the appropriate course is for the trial to take place in the ordinary way with objections to evidence being taken as and when they arise.

11. If the jurisdictional triggers set forth in s 38 are enlivened, then no doubt ASIC will make an appropriate application in the course of the hearing.  I am, of course, anxious for the trial to proceed in the most efficient and expeditious manner as possible but I am unable to see any reason, at this stage, for making the orders sought in the notice of motion either in the form as filed or in the way in which it was confined by Mr Stevenson during argument.

12. Accordingly, the order I will make is that the motion be dismissed. I will order costs in the cause.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson J.

Associate:

Dated:       7 February 2007

Counsel for the Applicant:	Mr J Stevenson SC with Ms J Single
Solicitor for the Applicant:	Australian Securities and Investments Commission
Counsel for the Respondent:	Mr D Ryan SC with Mr R A Dick
Solicitor for the Respondent:	Freehills
Date of Hearing:	7 February 2007
Date of Judgment:	7 February 2007