Australian Securities and Investments Commission v Fortescue Metals Group Ltd
[2009] FCA 406
•24 April 2009
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Fortescue Metals
Group Ltd [2009] FCA 406AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION v FORTESCUE METALS GROUP LTD (ACN 002 594 872) and JOHN ANDREW HENRY FORREST
WAD 55 of 2006
GILMOUR J
24 APRIL 2009
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 55 of 2006
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION
ApplicantAND: FORTESCUE METALS GROUP LTD (ACN 002 594 872)
First RespondentJOHN ANDREW HENRY FORREST
Second Respondent
JUDGE:
GILMOUR J
DATE:
24 APRIL 2009
PLACE:
PERTH
RULING
RECONSIDERATION OF INTERLOCUTORY RULING IN RELATION TO ADMISSIBILITY OF WITNESS STATEMENT OF LOU-LIN (LAWRENCE) XIN
On 17 April 2009 I gave a ruling in relation to the admissibility of parts of the witness statement of Lou-Lin Xin. I ruled that the parts of the witness statement which the first defendant will seek in due course to tender are, with the exception of para 28, admissible. I ruled that paras 10-21 of Mr Xin’s statement were relevant, and that statements attributed to Mr He were admissible by virtue of the exception created by s 66A of the Evidence Act. The plaintiff has asked me to revisit my interlocutory ruling.
Senior counsel for the plaintiff, Mr Young QC, submitted (transcript p 485) that Mr Xin’s evidence cannot have any relevance to the issues following the first defendant’s decision not to call any of its executives to give evidence as to their intentions or state of mind when they made the representations of which the plaintiff complains.
Accordingly, I am asked to reconsider the admissibility of the entire statement (transcript p 486). Mr Young says the basis advanced for Mr Xin’s evidence on grounds of admissibility was that the evidence was adduced not for the truth of what was said, but rather the fact that it was said. Mr Young says further that the fact that it was said is not relevant in the absence of any evidence from the first defendant’s executives as to their beliefs when they made the representations and claims in the various press releases and media presentations (transcript p 484).
It is said by Mr Young (transcript p 484) that my ruling was predicated on a submission to the effect that FMG would call its executives as witnesses. However, no such submission was made by Mr Thomson, junior counsel for the plaintiff, in support of the plaintiff’s objections to Mr Xin’s statement (transcript pp 319-326). Plainly ASIC, on reasonable grounds, given the content of the cross-examination of some of its witnesses, assumed those executives would be called. However, my earlier ruling at pp 403-405 of the transcript did not have regard to that assumption.
Part of the evidence proposed to be adduced from Mr Xin is that in February 2005 at the request of FMG he travelled to Perth and met Mr Forrest, Mr Rowley and other executives. Mr Xin was commissioned to approach Mr He, who was the deputy chief of the Overseas Investment Bureau of NDRC on behalf of FMG. Later in February when Mr Xin was back in Hong Kong he had a telephone discussion with Mr He. FMG seeks to lead the content of that conversation in evidence. The substance of that conversation was relayed to the second defendant by Mr Xin.
Mr Xin’s relationship with FMG was formalised in a 12 month consultancy appointment in early April 2005 for Mr Xin to assist FMG in its dealings with NDRC. Shortly after, Mr Xin met Mr He in Beijing in his consultant capacity. Mr Xin had a discussion with Mr He concerning the framework agreements. Again, Mr He told him things which FMG seeks to adduce in evidence concerning the equity negotiations with the Chinese companies. Later again that month Mr Xin met with unnamed representatives of MCC where again the matter of equity was the subject of discussion.
Whilst Mr Xin does not expressly state that he passed on the content of these later communications by Mr He and MCC to the second defendant or other FMG executives, a submission is plainly open that I should infer in the circumstances that such was the case.
Further, as I stated in my earlier ruling, there was evidence to support a submission that communication of the matters to Mr Xin was thereby communication to FMG. There was a rational basis for a submission that I may infer that statements by Mr He to Mr Xin were not only immediate statements to FMG but were statements which would be relayed to the board of FMG. I would in any event be prepared to entertain a submission by the first defendant for leave to clarify that aspect of his evidence with Mr Xin when he is called to give evidence.
In relation to the relevance of Mr Xin’s statement, I remain of the view that the evidence of Mr Xin is relevant to a full appreciation of the case put by ASIC in so far as it raises the issue of equity. I note that Mr Thomson in his submissions (transcript p 321) referred to “a developing position about the equity negotiations” and stated that the fact of equity negotiations is a relevant matter on the pleadings. Mr Young stated at p 331 that the case made by ASIC is that “the negotiations always relevantly included equity and that is a very relevant matter to the nature of the agreements and to disclosure obligations”. There is no reason now, in my view, why Mr Xin’s evidence in relation to the issue of equity should be excluded. Further, there is no reason to exclude Mr Xin’s evidence simply because the FMG executives will not be called to give evidence (in Mr Young’s words, transcript p 484) as to their beliefs when they made the representations and claims in the various press releases and media presentations. In any event, I note, as submitted by Mr Dharmananda for FMG (transcript p 491), that there is already evidence from the former FMG executive Mr Heyting in relation to the beliefs of the FMG executives.
In my earlier ruling, I stated that I thought it was appropriate to consider the evidence objected to on the ground of hearsay as a whole rather than in piecemeal fashion. I stated that although the statements attributed to Mr He were hearsay, they are evidence of his intentions and state of mind in relation to the question of the negotiations for equity viewed broadly. I stated there is other evidence which tends to suggest that to some extent Mr He spoke for the Chinese parties to the Framework Agreements. I concluded that the evidence objected to was admissible by virtue of the exception to the hearsay rule created by s 66A of the Evidence Act. I remain of that view.
I have been referred by the plaintiff to the on-line commentary on the Evidence Act by Stephen Odgers SC, where it is noted that s 66A was originally incorporated in s 72 of the Evidence Act and was renumbered and placed in Div 2 dealing with “First-hand hearsay” thereby making it clear that the provision created an exception to the hearsay rule only in respect of first-hand hearsay. In my opinion, the statements attributed to Mr He by Mr Xin are first-hand hearsay, and are contemporaneous representations about Mr He’s knowledge or state of mind in relation to the relevant issue of the state of the negotiations between the Chinese companies and FMG on equity. There is no issue here, as contemplated in the commentary, of effectively abrogating the hearsay rule as contained in s 59 by allowing the admission of statements of belief or memory in adopting a broad interpretation of s 66A.
Accordingly, the ruling I made previously stands and is in my opinion unaffected by the fact that FMG executives will not be called to give evidence.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate:
Dated: 24 April 2009
Counsel for the Applicant: Mr N J Young QC with Mr J A Thomson and Mr D J Crennan Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the First Respondent: Mr J Karkar QC with Mr B Dharmanada and Mr R J Price Solicitor for the First Respondent: Clayton Utz Counsel for the Second Respondent Mr A Myers QC with Mr M Thangaraj Solicitor for the Second Respondent: Jackson McDonald
Date of Hearing: 22 April 2009 Date of Judgment: 24 April 2009
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