Australian Securities and Investments Commission v Flugge and Geary (Ruling No 6)
[2015] VSC 794
•17 November 2015
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
CORPORATIONS’ LIST
S CI 2007 10077
IN THE MATTER OF AWB LIMITED (ACN 081 890 459)
BETWEEN:
| AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION | Plaintiff |
| v | |
| TREVOR JAMES FLUGGE | Defendant |
- AND -
S CI 2007 10081
IN THE MATTER OF AWB LIMITED (ACN 081 890 459)
BETWEEN:
| AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION | Plaintiff |
| v | |
| PETER ANTHONY GEARY | Defendant |
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JUDGE: | ROBSON J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 November 2015 |
DATE OF JUDGMENT: | 17 November 2015 |
CASE MAY BE CITED AS: | ASIC v Flugge & Geary (Ruling No 6) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 794 |
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EVIDENCE – Tender of hearsay evidence under Part 3.2 of the Evidence Act 2008 (Vic) (the Act) – Whether evidence constituted a previous representation by a person with personal knowledge of an asserted fact – Whether the personal knowledge was or might reasonably be supposed to have been, based on something that the person saw, heard or otherwise perceived within the meaning of s 62 of the Act – Ruled hearsay evidence admissible in part.
EVIDENCE – Whether discretion to refuse to admit hearsay evidence under s 135 of the Act enlivened – Consideration of whether evidence unfairly prejudicial to a party – Consideration of probative value of evidence sought to be tendered – Ruled s 135 of the Act not enlivened.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J O’Bryan AM SC with Mr J P Moore QC, Mr C H Truong and Ms C E Klemis | Australian Securities and Investments Commission |
| For the Defendant in S CI 2007 10077 | Mr S K Dharmananda SC, with Mr R F R Pintos-Lopez | Corrs Chambers Westgarth |
| For the Defendant in S CI 2007 10081 | Mr I D Hill QC with Mr A Tragardh | Galbally Rolfe |
HIS HONOUR:
Introduction
ASIC seeks to tender in the case against Mr Flugge and Mr Geary twelve extracts, being:
(a) extracts from the transcript of evidence of Mr Emons given at the Cole Royal Commission on 19 December 2005;
(b) extracts from the transcript of evidence of Mr Emons given at the Cole Royal Commission on 2 February 2006; and
(c) extracts from a draft statutory declaration that Mr Emons accepted as true and accurate in evidence before the Cole Royal Commission on 2 February 2006.
Mr Flugge, and Mr Geary who adopted Mr Flugge’s submissions, objects to the extracts being tendered for three reasons:
(a) first, the extracts are not admissible under s 64(3) of the Evidence Act 2008 (Vic) (the Act);
(b) if the extracts are admissible under s 64(3) of the Act, the Court should refuse to admit the extracts pursuant to s 135 of the Act as its probative value is substantially outweighed by the danger that it might be unfairly prejudicial; and
(c) the evidence is inadmissible as against Mr Flugge as it is not relevant within the meaning of s 55(1) of the Act.[1]
[1]Section 55(1) provides that ‘The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.’
The admission of hearsay evidence
Section 64 of the Act provides:
(1)This section applies in a civil proceeding if a person who made a previous representation is available to give evidence about an asserted fact.
(2) The hearsay rule does not apply to—
(a)evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made; or
(b)a document so far as it contains the representation, or another representation to which it is reasonably necessary to refer in order to understand the representation—
if it would cause undue expense or undue delay, or would not be reasonably practicable, to call the person who made the representation to give evidence.
Note
Section 67 imposes notice requirements relating to this subsection. Section 68 is about objections to notices that relate to this subsection.
(3)If the person who made the representation has been or is to be called to give evidence, the hearsay rule does not apply to evidence of the representation that is given by—
(a)that person; or
(b)a person who saw, heard or otherwise perceived the representation being made.
(4)A document containing a representation to which subsection (3) applies must not be tendered before the conclusion of the examination in chief of the person who made the representation, unless the court gives leave.
Note
Clause 4 of Part 2 of the Dictionary is about the availability of persons.
The hearsay rule appears in s 59(1); this section provides:
The hearsay rule—exclusion of hearsay evidence
(1)Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation.
(2)Such a fact is in this Part referred to as an asserted fact.
(2A)For the purposes of determining under subsection (1) whether it can reasonably be supposed that the person intended to assert a particular fact by the representation, the court may have regard to the circumstances in which the representation was made.
The exception to the hearsay rule only applies to ‘first hand’ hearsay where the previous representation was made by a person who had personal knowledge of an asserted fact. A person has personal knowledge of the asserted fact if his or her knowledge of the fact was, or might reasonably be supposed to have been, based on something the person saw, heard or otherwise perceived, other than a previous representation made by another person about the fact: s 62(1) and (2).
For hearsay evidence to be admissible, the Court must be satisfied that the witness had personal knowledge of the asserted fact. That is, the Court must be satisfied that his or her knowledge of the asserted fact was, or might reasonably be supposed to have been, based on something the person saw, heard or otherwise perceived, other than a previous representation made by another person about the fact.
ASIC seeks to lead hearsay evidence to prove the existence of twelve instances of asserted facts.
Extract 1: Transcript of Mr Emons’ evidence at the Cole Commission 19 December 2005
ASIC seeks to tender an extract from the transcript of Mr Emons’ evidence at the Cole Royal Commission on 19 December 2005, which runs from Transcript page 33, line 8 to transcript page 35, line 9.
ASIC seeks to tender that extract as evidence of Mr Emons’ previous representation of the asserted fact that ‘[i]n around June or July 1999, Flugge said to Emons words to the effect that AWB had to find a way to pay the trucking fees, and that as long as it was not costing AWB money, AWB had to be satisfied that it could find a methodology.’ I will deal with this extract in several parts.
Transcript page 33 line 8 to page 34, line 15
Those passages are as follows:
MR AGIUS: Q. At the time of these negotiations in June and July 1999 - - -
A. I had no idea how we were going to do this.
Q.The later letters in that bundle record a number of offers and counter-offers passing between AWB, on the one hand, and IGB, on the other hand; do they not?
A. Correct.
Q.They were fairly robust negotiations between the two companies; is that right?
A. Correct.
Q.But nowhere in those documents do I see any reference to that provision about transportation being removed?
A. No.
Q. You had grave misgivings about that term, did you not?
A. I did.
Q. Why did you not suggest that term be removed?
A. Because they had insisted on including it.
Q. When you say ‘they’, who is ‘they’?
A. The IGB.
Q. And how had that insistence been communicated?
A. That that was part – was to be part of the contract.
Q. Who told you that?
A. Zuhair.
Q. Personally?
A. Yes.
Q. Who was present on that occasion?
A. It was a phone conversation.
Q. Just the two of you on the telephone; is that right?
A. Yes.
Q. What did Zuhair tell you?
A.That the trucking fee would be part of the tender document. There was a discussion on a visit where, again, we tried to discuss the issue of whether it should be included or not, and he was insistent on it being part – he said there would be no problems because it had the UN approval.
THE COMMISSIONER: Q. I’m just a little at a loss here. Did you understand this term to oblige AWB to deliver the wheat in trucks, if I can put in colloquially, anywhere in Iraq?
A. Correct, sir.
Mr Flugge submits that the evidence in the above extract is irrelevant to the fact asserted. That is, those lines are irrelevant to prove what Mr Flugge said to Mr Emons.
In my view, for the purposes of determining whether Mr Emons intended to assert the fact asserted it is not necessary to have regard to the conversation that Mr Emons had with Zuhair.
Transcript page 33, line 8 to page 34, line 15 are not admissible.
Transcript page 34, line 16 to page 35, line 9
Those passages are as follows:
Q.You made an offer to do that at a time when you had no idea how you could possibly carry that out?
A.These negotiations were very unusual. The discussions were very difficult because of the phone lines. We had grave concerns about how we were going to execute this contract to the point where we were looking at various ideas, but at the end of the day, we were determined to do the contracts. They were very important to the organisation at the time. Having had discussions with my sort of senior managers, I was clearly of the opinion that the organisation wanted to do this business and that we would find a way around it.
Q. The senior managers being - - -
A. Nigel Officer, Murray Rogers and Trevor Flugge
Q. And you spoke with each of them about this problem, did you?
A. Yes, I did.
Q. Was that about this time – that is this June/July?
A. It was during this period of time, yes.
Q. What was their response when you told them about this problem?
A.Basically, it was quite clear that we had to find a method to pay this money. As long as it was not costing the AWB any money, we had to be satisfied that we could find a methodology.
Q. Who told you that?
A. That came from Trevor Flugge.
Q. Where did you have that discussion with him?
A. I believe I had it with him in his office.
Q. At the Wheat Board?
A.At the Wheat Board. He had also travelled with me at this sort of time. We had quite a number of discussions while travelling.
Mr Flugge seeks to challenge the admission of these passages as two separate extracts. I do not consider it is appropriate to assess the admissibility of the extract between transcript page 34, line 16 and 46 separate from the extract at Transcript page 34, line 47 to transcript page 35, line 9. I will consider as a whole the extract above.
In my view this evidence is admissible. I am satisfied that Mr Emons had personal knowledge of the asserted fact.
The fact that Mr Emons is not able to recall where the conversation took place does not make the evidence inadmissible. Rather, his failure to recall the place may go to its weight.
Section 135 of the Act
Mr Flugge submitted that, if the evidence was admissible, it should be excluded in the exercise of the court’s discretion under s 135 of the Act. Is the Court’s discretion to refuse to admit the evidence enlivened in this case?
Under s 135 of the Act, the Court’s discretion is enlivened if, relevantly, the probative value of the evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party; or be misleading or confusing; or cause or result in undue waste of time.
The probative value of a piece of evidence is the extent to which it could rationally affect the assessment of the probability of the existence of a fact in issue.[2]
[2]The Act, Dictionary, Pt 1.
In considering the probative value of a piece of evidence, the Court is only obliged to ‘accept the evidence to be truthful but is not required to make an assumption that its reliability will be accepted.’[3]
[3]Dupas v R (2012) 40 VR 182, 196-197 [63].
The probative value of the evidence
The fact in issue is that Mr Flugge said to Mr Emons words to the effect that AWB had to find a way to pay trucking fees, and that as long it was not costing AWB money, AWB had to be satisfied that it could find the methodology.
The evidence sought to be tendered is not evidence of what Mr Emons recalls being said. Mr Emons prefaces his statement with the word ‘basically’ which indicates he is giving a summary or encapsulation of what was said. It indicates he cannot recall what was said some six or seven years previously.
The evidence is a recollection of words said some six or seven years previously. In my view the evidence will not have great probative value.
In Commonwealth v McLean,[4] Handley and Beazley JJA (with whom Santow AJA concurred) said that:[5]
It would be unfairly prejudicial within s 135(a) for evidence to be tendered against a party who could not contest it.
[4]Commonwealth v McLean (1996) 41 NSWLR 389.
[5]Ibid, 401.
Mr Emons is available for cross examination. It is now some sixteen years since the relevant events took place. In Mr Emons’ evidence in chief he constantly said that he could not recall conversations that took place. It would be unusual if he could.
In those circumstances, the evidentiary value of any cross examination may be diminished through the failure of memories by the passage of time. One of the difficulties in bringing proceedings relating to events that took place sixteen years ago is that memories of conversations will have been lost. Conversations that may have urged caution or other qualifications that may have been mentioned, will be forgotten.
Nevertheless, the fact that Mr Flugge’s ability to cross examine may be diminished does not constitute material prejudice. The authorities establish that any prejudice can be taken into account by the trial judge in considering the weight to be given to the evidence.[6]
[6]See DPP v Curran [2012] VSCA 244, [55]; Zraika v Walsh [2014] NSWSC 892 (where a witness had no recollection of a car accident but he had made a previous statement to an insurance investigator); R v GAC (Unreported, New South Wales Court of Criminal Appeal, Gleeson CJ, McInerny and Sully JJ, 1 April 1997).
In ACCC v Australian Safeway Stores Pty Ltd,[7] Goldberg J said:[8]
The discretion to refuse to admit evidence on the grounds of prejudice is well-known to the criminal law but less relevant in a civil context particularly with a judge sitting alone. As one commentator has said:
Plainly, it is likely that this ‘danger’ will usually only have significance in a jury trial. Where the trial is by a judge without a jury, it will be an unusual judge or magistrate who is prepared to concede that a danger exists that he or she might be `unfairly prejudiced’ by evidence. On the other hand, the provision is not limited to misuse of the evidence by the Tribunal of fact. Unfair prejudice may arise from procedural considerations. Thus an opposing party may be significantly prejudiced by hearsay evidence if unable to cross-examine on a crucial issue in the litigation. Alternatively, the opposing party may be unfairly prejudiced by evidence if prevented from properly challenging its reliability.
[7]ACCC v Australian Safeway Stores Pty Ltd [1999] FCA 1269.
[8]Ibid [28] quoting S Odgers, Uniform Evidence Law (LBC Information Services, 3rd ed, 1998) 443.
In R v Clark,[9] Heydon JA (with whom Bell J agreed) said as follows:[10]
[9](2001) 123 A Crim R 506.
[10]Ibid, 583-584 [164].
The appellant submitted that the trial judge should have exercised his discretion under s 135 to exclude the evidence. The evidence was not misleading, confusing or wasteful of time. It was adverse to the appellant’s interest, but not unfairly so. The appellant said that the evidence was ‘so significantly prejudicial and so impossible to challenge its veracity that it is wrong to permit it.’ The witnesses to the deceased’s statements were all there for cross-examination. There was in fact very little cross-examination on the evidence complained of. The appellant was there to deny having said or done any of the things attributed to him and, credibly or not, he did deny most of them. The deceased was not there for cross-examination, but if the impossibility of challenging the veracity of hearsay statements by non-witnesses were generally to justify, or were often to be a significant factor in justifying, a decision to exclude evidence in the court’s discretion under s 135 or by reason of a finding of ‘unfair’ prejudice under s 137, the result would be to write the hearsay exceptions out of the Act to a large extent. That outcome would be contrary to the legislative intention: cf Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 571 per Hutley JA. Further, in Papakosmas at 325 [91] - 326 [93] McHugh J said:
Evidence is not unfairly prejudicial merely because it makes it more likely that the defendant will be convicted. In BD (1997) 94 A Crim R 131 at 139 (emphasis in the original) Hunt CJ at CL pointed out:
‘The prejudice to which each of the sections [ss 135, 136 and 137] refers is not that the evidence merely tends to establish the Crown case; it means prejudice which is unfair because there is a real risk that the evidence will be misused by the jury in some unfair way.’ (Footnote omitted.)
In its Interim Report, the Australian Law Reform Commission explained (at Vol 1, par 644):
‘By risk of unfair prejudice is meant the danger that the fact-finder may use the evidence to make a decision on an improper, perhaps emotional, basis, ie, on a basis logically unconnected with the issues in the case. Thus evidence that appeals to the fact finder’s sympathies, arouses a sense of horror, provides an instinct to punish, or triggers other mainsprings of human action may cause the fact-finder to base his decision on something other than the established propositions in the case. Similarly, on hearing the evidence the fact-finder may be satisfied with a lower degree of probability than would otherwise be required.’
Some recent decisions suggest that the term ‘unfair prejudice’ may have a broader meaning than that suggested by the Australian Law Reform Commission and that it may cover procedural disadvantages which a party may suffer as the result of admitting evidence under the provisions of the Evidence Act. [See Einstein, ‘Reining in the judges? - An examination of the discretions conferred by the Evidence Acts 1995’, (1996) 10 UNSWLJ 268 at pp 273-274.] In Gordon v Pike (No 1) (unreported; Federal Court, Beaumont J, No NB 502 of 1993, 1 September 1995) (but see Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 at 434-436, per Wilcox, O’Connor and Sackville JJ, a decision of the Full Court of the Federal Court), Beaumont J used his discretion under s 135(a) to exclude the transcript of a bankrupt, which would otherwise have been admitted as an exception to the hearsay rule pursuant to s 63, on the basis that the prejudicial effect of being unable to cross-examine the maker of the representation on a crucial issue in the litigation substantially outweighed the probative value of the evidence. In Commonwealth v McLean (1996) 41 NSWLR 389 at 401-402, per Handley and Beazley JJA, Santow AJA agreeing, the New South Wales Court of Appeal also used s 135(a) to exclude hearsay evidence otherwise admitted via the exception contained in s 64 on the basis that the defendants were prevented by other evidentiary rulings from effectively challenging the evidence. It is unnecessary to express a concluded opinion on the correctness of these decisions, although I am inclined to think that the learned judges have been too much influenced by the common law attitude to hearsay evidence, have not given sufficient weight to the change that the Evidence Act has brought about in making hearsay evidence admissible to prove facts in issue, and have not given sufficient weight to the traditional meaning of ‘prejudice’ in a context of rejecting evidence for discretionary reasons.
I was also referred to Kennedy v Wallace,[11] where Gyles J referred to the exceptional circumstances for rejecting a statement recorded by the Swiss authorities as follows:[12]
On 4 March I ruled that the purported record of an interview of Rivkin (and others) (the record) by Swiss authorities, if otherwise admissible, would be rejected pursuant to s 135 of the Evidence Act. I did not then give my reasons for that ruling. The following are those reasons.
In my opinion the record in question has little, if any, relevance to the issues in this proceeding which (for present purposes) are limited to Kennedy’s purpose in making the notes claimed to be privileged. There is no evidence that Kennedy saw or had access to the record prior to his making the notes in issue. A claimed version of the Rivkin interview had been published in the AFR on 30 October 2003. Kennedy had met Rivkin about that publication before leaving for Switzerland and before making the notes in issue. It is clear that his proposed visit to Hafner was a direct result of his concern about the AFR publication of the alleged record by Rivkin. The most that could relevantly be drawn from the record (if admitted) would be to support the conclusion that Rivkin had made the statements attributed to him in the AFR article. This adds little, if anything, to the other known circumstances relating to Kennedy’s purpose in making the notes in issue.
On the other hand, the provenance of the record is doubtful, as the source was the AFR rather than any official source notwithstanding the availability of official sources. There are other serious questions raised as to authenticity. For example, the document states that the interview was conducted in English, yet the English version sought to be tendered is a translation of a German version which is also sought to be tendered. There are unexplained blanks in the record and in it other documents are referred to which are not part of the record. Successive translations have rendered the meanings of some words doubtful. The record has the capacity to be misleading and confusing within the meaning of s 135(b) of the Evidence Act. This danger substantially outweighs any slight probative value it may have and the record accordingly should not be admitted.
[11](2004) 208 ALR 424.
As these cases indicate, any perceived prejudice will be taken into account by the Court in assessing the weight to be given to the evidence.
I am not satisfied that the evidence might be unfairly prejudicial to Mr Flugge.
Is the probative value of the evidence substantially outweighed by the danger that it might be unfairly prejudicial to Mr Flugge? In my view, it is not. The proceedings are civil penalty proceedings with all the adverse consequences to Mr Flugge that that involves. The proceedings have been brought in relation to events that took place over fifteen years ago. That puts Mr Flugge at some disadvantage. Evidence of conversations by their nature will be imprecise and subject to speculation and confusion as to what was said with the topic being discussed. However, these issues do not constitute prejudice to a party that would substantially outweigh the probative value of the evidence. Rather, they go to the weight of the evidence.
As set out above, probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue.
In my opinion, the evidence could, to a material extent, rationally affect the assessment of the probability of the existence of a fact in issue. As I have said, in my opinion my discretion is not enlivened under s 135, and therefore I have no discretion in the matter to exclude the evidence.
The extract from Mr Emons’ evidence at the Cole Commission on 19 December 2005, between transcript page 34 line 16 to page 35, line 9 is admissible evidence and should not be excluded under s 135 of the Act.
Extract 2: Transcript of Mr Emons’ evidence at the Cole Commission 19 December 2005
ASIC seeks to tender a further extract from the transcript of Mr Emons’ evidence at the Cole Commission on 19 December 2005, which runs from transcript page 36, line 44 to transcript page 37, line 38. Those passages are as follows:
MR CONDON: Q. Was it your understanding at the time, that is, in June 1999 onwards, that the fee would be received by the Iraqi Government or some aspect of the Iraqi Government?
A.Some aspects – some part of that fee wold be passed on to the Iraqi Government.
Q.When you say ‘part’, do you have in mind that some would go somewhere else, or all of it would go to the Iraqi Government?
A.Just I assumed that in part, if they were using a Jordanian company, the Jordanian company would have to cover their costs.
Q.The Jordanian company came into the picture in about October, did it not?
Q. I believe it did, yes.
Q.As at June and July 1999, was it your view that the money would go to the Iraqi Government?
A. Indirectly or directly, yes.
Q.And, of course, you had an understanding that such payments might constitute a breach of the United Nations Resolutions; is that correct?
A. No. I believed that it would be a breach of the US law, not UN.
Q. Did you discuss your concerns with anyone within AWB Limited?
A.Yes, I discussed them with Nigel Officer, Murray Rogers and Trevor Flugge.
Q.And were they in one-to-one meetings, or did you have a meeting all together where it was discussed?
A.They were usually informal, but I think there were meetings involving two or three of them at a time.
Q.Can you recall what you said to those gentlemen on those occasions and what their response was?
A.I could only give you a general response, which was that the task had to be done, to complete.
ASIC seeks to tender this extract as evidence of the asserted fact that Mr Emons spoke to Mr Flugge about Mr Emons’ concerns that payments to the Jordanian company would breach US law, and Flugge’s response in substance was that the payments had to be made.
Mr Emons was not able to answer the question asked of him (at transcript page 37, line 35), which was, ‘can you recall what you said to those gentlemen on those occasions and what their response was.’
Mr Emons does not recall what was said. He says that he ‘could only give a general response which was that the task had to be done, to complete.’
I am not satisfied that Mr Emons had personal knowledge of the asserted fact, as I am not satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act. Mr Emons is unable to recall what Mr Flugge said.
Extract 2 is not admissible.
Extract 3: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006 (incorporating by reference an unsigned statutory declaration dated January 2006)
ASIC seeks to tender an extract from the transcript of Mr Emons’ evidence at the Cole Commission on 2 February 2006 from page 1856, lines 9 to 23, which incorporates by reference paragraphs 24 to 26 of an unsigned statutory declaration dated January 2006. Those passages are as follows:
MR AGIUS: Q. Mr Emons, would you look at this document. Is that a copy of a statement in your name, which is in the form of an as yet unsigned statutory declaration?
A. It is, sir.
Q.Is there annexed to it a bundle of documents, being documents to which you refer in that document?
A. That’s correct.
Q.To the best of your knowledge and belief, is that part of the document which is headed ‘Statutory Declaration’, which concludes on page 13, true and correct?
A. To the best of my knowledge.
MR AGIUS: I tender that, Mr Commissioner.
EXHIBIT #96 UNSIGNED STATUTORY DECLARATION OF MR EMONS.
…
24.A major annual event was the International Grain conference which convened in London, typically in June. I attended the conference convened in 1999. To the best of my recollection, AWB Limited was represented by Mr Flugge, Mr Officer and Ms Martin, who was then the General Manager of Corporate Affairs. She reported to Mr Rogers in his capacity as CEO.
25.By this time I had become aware that most, if not all, of the European companies dealing with cereals sold to Iraq had to pay some form of transportation fee. This was common knowledge amongst the traders whom I spoke at this conference and on other occasions in the second half of 1999.
26.During the conference I attended a dinner with representatives of Ronly. Mr Officer, Mr Flugge and Ms Martin were also present. Ronly was represented by, amongst others, Nori Bali and Erol Yahya. In the course of that dinner, I recall the subject of Iraq being raised and discussion turning to the payment of the trucking fee. In circumstances which I now cannot recall, someone from Ronly said, quite audibly, to me:
We can help you with this. We’ll take a fee but we can discuss that later.
ASIC seeks to tender these extracts of the transcript as evidence of the asserted fact that in June 1999, Emons attended a dinner with, amongst others, Mr Flugge, Mr Officer and Mr Martin of AWB, and Nori Bali and Erol Yahya of Ronly. During the course of the dinner a Ronly representative, speaking about the payment of the Iraq trucking fee, said quite audibly: ‘We can help you with this. We’ll take a fee but we can discuss that later.’ At the time that statement was made, Mr Flugge, Mr Officer and Mr Martin were seated next to or around Mr Emons.
Mr Emons’ evidence is that the statement was made to him. In my view, the asserted fact is not based on the matters Mr Emons says he saw, heard or otherwise perceived as set out in paragraphs [24] to [26] of the statutory declaration. Those paragraphs refer to a statement made to Mr Emons. Those paragraphs do not state that Mr Flugge, Mr Officer and Mr Martin were seated next to Mr Emons.
I am not satisfied that Mr Emons had personal knowledge of the asserted fact, as I am not satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
Extract 3 is not admissible.
Extract 4: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006, incorporating by reference an unsigned statutory declaration dated January 2006
ASIC seeks to tender paragraph 28 of an unsigned statutory declaration dated January 2006, which, as noted above, was incorporated by reference in Mr Emons’ evidence at the Cole Commission on 2 February 2006. Those passages are as follows:
28. Upon my return to Melbourne I had a meeting with Nigel Officer in his room at AWB Limited. The subject matter of the discussion was Ronly’s offer. I recall saying something like:
‘I think it will be a good idea to use Ronly to make these payments.’
I also said words to the effect:
‘There will be fees involved in this.’
In response, he said words to the following effect:-
‘That all sounds reasonable. Let me have a think about it, I’ll probably discuss this with Muzza.’
I understood him to be referring to Murray Rogers.
ASIC seeks to tender the above extract as evidence of the asserted fact that Mr Emons had a meeting with Mr Officer in his room at AWB about Ronly’s offer regarding the trucking payments. Mr Emons said words to the effect:
I think it will be a good idea to use Ronly to make these payments. There will be fees involved in this.
In response, Mr Officer said words to the following effect:
That all sounds reasonable. Let me have a think about it. I’ll probably discuss this with [Murray Rogers].
The extract is relevant to establish that payment of the trucking fee was discussed with Mr Officer. That evidence is relevant to establish that many officers at AWB knew of the trucking fee or may have known of the trucking fee. I accept that evidence could rationally affect the probability that Mr Flugge knew of the payment of the trucking fee.
I am satisfied that Mr Emons had the required personal knowledge of the asserted fact. In my view, the evidence is admissible.
Should the evidence be excluded under s 135?
The evidence has probative value. The question is then, does any prejudice to any party substantially outweigh the probative value of the evidence under s 135 of the Act?
Mr Flugge relies on two grounds to contend that the Court’s discretion under s 135 is enlivened. First, the statutory declaration was dictated by counsel assisting the Royal Commission. The statutory declaration was subsequently adopted as a true and correct record by Mr Emons. In my experience, it is common practice for solicitors to prepare affidavits in a similar way.
Mr Flugge relies on limitations to cross-examination at the Royal Commission and says that there were restrictions on the transcript being available. In my view, and in view of the authorities on cross-examination discussed above, those complaints go to the issue of the weight that the Court may give to the evidence.
In my opinion, s 135 has not been enlivened.
Extract 4 is admissible.
Extract 5: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006, incorporating by reference an unsigned statutory declaration dated January 2006
ASIC seeks to tender paragraphs 29 and 30 of the unsigned statutory declaration dated January 2006. Those passages are as follows:
29. Another meeting occurred about this issue, although I do not recall precisely when it took place. It was convened by Mr Officer in his office. Mr Watson and Mr Ingleby also attended. Mr Ingleby was the Chief Financial Officer of AWB Limited and I was of the belief at the time that Mr Ingleby and Mr Officer shared a close working relationship.
30. By this stage Mr Watson knew about what was proposed but I did not know if Mr Ingleby knew of the detail. Mr Officer said to him words to the following effect:
‘You know we have to pay this trucking fee. The guys are proposing that we pay Ronly and the shipping companies to do it directly and save our involvement. Are you comfortable with that?’
There then followed discussion about procedural aspects of what was being proposed. Mr Ingleby said words to the effect of:
‘I’m quite comfortable with that.’
ASIC seeks to tender those paragraphs as evidence of the asserted fact that: Mr Emons had a meeting with Mr Officer, Mr Watson and Mr Ingleby in Mr Officer’s office; during the course of this meeting, Mr Officer said words to the following effect:
You know we have to pay this trucking fee. The guys are proposing that we pay Ronly and the shipping companies to do it directly and save our involvement. Are you comfortable with that?
Mr Ingleby said words to the following effect of:
I’m quite comfortable with that.
I am satisfied that Mr Emons had personal knowledge of the fact asserted. I accept that the evidence is relevant under s 55(1) of the Act as it goes to show how widely known it was and therefore by inference whether the defendants knew.
For the reasons I have given in respect of extract 4, I am not satisfied that s 135 of the Act is engaged.
The objections to extract 5 will go to the weight of the evidence, as earlier discussed.
Extract 5 is admissible.
Extract 6: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006, incorporating by reference an unsigned statutory declaration dated January 2006
ASIC seeks to tender paragraphs 40 and 42 of the unsigned statutory declaration dated January 2006. Those passages are as follows:
40. I spoke to each of Messrs Officer, Rogers and Flugge about the contract. Those discussions were on occasions one on one but other occasions involved more than one.
…
42. I now cannot recall where or when I spoke to Mr Flugge about trucking fees. I do recall discussing those and related matters with him on a number of occasions. The matters discussed on those occasions included (probably more than once), the issue of a trucking fee being quoted at the price of US$12.00 per tonne. I recall saying in relation to this words to the effect:-
‘The contract is subject to UN approval; if that comes through it’s all well and good.’
I also recall saying to him words to this effect:-
‘We are looking at various methods to facilitate this.’
By which I was referring to the means of paying the money through indirect channels. I was contemplating both options because of the damage to AWB Limited that would occur in the event that the IGB refused to unload AWB’s vessels.
ASIC seeks to tender those paragraphs as evidence of the asserted fact that Emons had a number of discussions with Flugge in relation to the trucking fee.
Save for the section of paragraph 42 that begins ‘by which’ to ‘vessels’, I am satisfied that the evidence discloses that Mr Emons had personal knowledge of the fact as I am satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
I find that my discretion under s 135 of the Act is not engaged in respect of those passages for the reasons given earlier.
As to the words ‘by which’ down to the word ‘vessels’ appearing at the end of paragraph 42, that is not a thing that Mr Emons saw, heard or otherwise perceived. It is inadmissible.
Extract 6 is admissible save for the section beginning ‘by which’ to the end of paragraph 42.
Extract 7: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006, incorporating by reference an unsigned statutory declaration dated January 2006
ASIC seeks to tender paragraphs 42 and 43 of the unsigned statutory declaration dated January 2006. Those passages are as follows:
42. I now cannot recall where or when I spoke to Mr Flugge about trucking fees. I do recall discussing those and related matters with him on a number of occasions. The matters discussed on those occasions included (probably more than once), the issue of a trucking fee being quoted at the price of US$12.00 per tonne. I recall saying in relation words to the effect:-
‘The contract is subject to UN approval; if that comes through it’s all well and good.’
I also recall saying to him words to this effect:-
‘We are looking at various methods to facilitate this.’
By which I was referring to the means of paying the money through indirect channels. I was contemplating both options because of the damage to AWB Limited that would occur in the event that IGB refused to unload AWB’s vessels.
43. It was during those discussions that I refer to that Mr Flugge said to me words to the following effect:-
‘We have to find a way to pay this money. As long as it is not costing AWB any money, you have to find a method of paying it.’
ASIC seeks to tender those paragraphs as evidence of the asserted fact that during a discussion between Mr Flugge and Mr Emons in relation to the trucking fees:
a)Mr Emons said words to the following effect: ‘The contract is subject to UN approval; if that comes through it’s all well and good’, and ‘We are looking at various methods to facilitate this’; and
b)Mr Flugge said to Mr Emons words to the following effect: ‘We have to find a way to pay this money. As long as it is not costing AWB any money, you have to find a method of paying it.’
Save for the passage beginning in paragraph 42 ‘by which’ to ‘vessels’, I am satisfied that the evidence discloses that Mr Emons had personal knowledge of the facts asserted. I am satisfied that the evidence discloses that Mr Emons had personal knowledge of the fact as I am satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
The excluded words are not things that I am satisfied Mr Emons had personal knowledge of, as I am not satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
Extract 7 is admissible save for the section in paragraph [42] beginning ‘by which I was.’ I am not satisfied that my discretion under s 135 of the Act is enlivened for the reasons outlined earlier.
Extract 8: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006
ASIC seeks to tender an extract from Mr Emons’ evidence at the Cole Royal Commission, on transcript page 1940, from lines 11 to 19. Those passages are as follows:
Q:Can I ask you about the discussion that you refer to with Mr Flugge about some finer points of the trucking fee?
A.I had the occasion to go into Mr Flugge’s office to discuss various matters related to the markets we dealt with and I discussed in some detail the issue of this trucking fee and the complications we were having with the trucking fee, the payment, the execution through the organisation through to Alia, and some of the extensive problems we were having with discharge.
ASIC seeks to tender that passage as evidence of the asserted fact that Mr Emons discussed with Mr Flugge in Mr Flugge’s office in some detail the trucking fee and the complications AWB was having with the trucking fee, the payments to Alia for Transportation and General Trade Co and problems with discharge.
I am not satisfied that Mr Emons had personal knowledge of the asserted fact as I am not satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
The asserted fact is not based on things that Mr Emons saw, heard or otherwise perceived but rather, they are a summary of topics discussed.
Mr Emons said that he could not recall the exact words he used.
Extract 8 is not admissible.
Extract 9: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006
ASIC seeks to tender an extract from Mr Emons’ evidence at the Cole Royal Commission, from transcript page 1940, line 27 to transcript page 1941, line 4. Those passages are as follows:
A.The substance of what I was suggesting was that the mechanism had only just come into place, we were using it, it was not – it hadn’t solved our problems with the delays in getting the vessels discharged quicker. That was the type of detail we were talking about.
Q. Did you tell him what the mechanism was – that is - -
A. He knew what the mechanism was.
Q. I’m sorry?
A. He knew what the mechanism was.
Q. How is it you can say that?
A.Because we’d had discussions – I travelled quite a bit with Trevor over a number of years and Trevor was aware that we were using Ronly as a facilitator of that trucking fee.
Q. Had you had discussions with him about that in the past?
A. I had had broad discussions with him about that, yes.
THE COMMISSIONER: Q. Had you discussed with him the payment of the fee to Ronly?
A. Yes, I had done, Commissioner.
ASIC seeks to tender the above passage as evidence of the asserted fact that Emons discussed with Flugge the payment of the trucking fee to Ronly.
I am not satisfied on the evidence that Mr Emons had personal knowledge of the asserted fact as I am not satisfied that his knowledge of the fact was, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
Mr Emons refers to ‘broad discussions’ which is his summary of what he heard rather than stating a recollection of what he heard. He also refers to ‘that was the type of detail’ in general terms, rather than recollecting the discussions.
Mr Emons’ view is not a fact. Mr Emons says that Mr Flugge ‘knew what the mechanism was.’ That is not something based on what Mr Emons saw, heard or otherwise perceived, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
Extract 9 is not admissible.
Extract 10: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006
ASIC seeks to tender an extract from Mr Emons’ evidence at the Cole Royal Commission, from transcript page 1940, line 27 to transcript page 1941, line 8. Those passages are as follows:
A. The substance of what I was suggesting was that the mechanism had only just come into place, we were using it, it was not – it hadn’t solved our problems with the delays in getting the vessels discharged quicker. That was the type of detail we were talking about.
Q. Did you tell him what the mechanism was – that is - -
A. He knew what was mechanism was.
Q. I’m sorry?
A. He knew what was mechanism was.
Q. How is it you can say that?
A.Because we’d had discussions – I travelled quite a bit with Trevor over a number of years and Trevor was aware that we were using Ronly as a facilitator of that trucking fee.
Q. Had you had discussions with him about that in the past?
A. I had had broad discussions with him about that, yes.
THE COMMISSIONER: Q. Had you discussed with him the payment of the fee to Ronly?
A. Yes, I had done, Commissioner.
MR AGIUS: Q. Had he expressed a view about it?
A. He certainly didn’t express a negative view at all, no.
ASIC seeks to tender that extract as evidence of the asserted fact that Mr Flugge did not in the course of his discussions with Emons express a negative view at all about the payment of the trucking fee to Ronly.
Mr Emons says in this passage in referring to what he previously described as broad discussions with Mr Flugge: ‘He certainly didn’t express a negative view at all.’
In my view, whether a view is negative or not is a matter of opinion and not a thing that was based on what Mr Emons saw, heard or otherwise perceived, or might reasonably be supposed to have been, based on things that Mr Emons saw, heard or otherwise perceived, as required by the Act.
Extract 10 is inadmissible.
Extract 11: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006
ASIC seeks to tender an extract from Mr Emons’ evidence at the Cole Royal Commission, on transcript page 1941, from line 17 to 19. Those passages are as follows:
Q.Had you told Mr Flugge that the trucking fee was something that the IGB had imposed?
A. Yes.
ASIC seeks to tender those lines as evidence of the asserted fact that Mr Emons told Mr Flugge that the trucking fee was something that the IGB had imposed.
This evidence follows the evidence above about the broad discussions. This time Mr Emons gives evidence of a specific piece of information that was being conveyed to Mr Flugge.
I am satisfied that Mr Emons had personal knowledge of the asserted fact.
I am not satisfied that s 135 is enlivened for the reasons discussed earlier.
Extract 11 is admissible.
Extract 12: Transcript of Mr Emons’ evidence at the Cole Commission 2 February 2006
ASIC seeks to tender an extract from Mr Emons’ evidence at the Cole Royal Commission, from transcript page 1941, line 44 to transcript page 1942, line 2. Those passages are as follows:
Q.Had you told Mr Flugge that it was the IGB that had nominated Alia - -
A. Yes.
Q. - - as the recipient of the trucking fee?
A. Yes.
ASIC seeks to tender that extract as evidence of the asserted fact that Mr Emons told Mr Flugge that it was the IGB that had nominated Alia as the recipient of the trucking fee.
For the reasons given in respect of extract 11, extract 12 is also admissible.
I am not satisfied that s 135 is enlivened for the reasons discussed earlier.
Extract 12 is admissible.
That is my ruling.
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