Australian Securities and Investments Commission v Geary and Flugge (Ruling No 3)
[2015] VSC 656
•5 November 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
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: | 4 November 2015 |
DATE OF RULING: | 5 November 2015 |
CASE MAY BE CITED AS: | ASIC v Geary & Flugge (Ruling No 3) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 656 First Revision 20 December 2016 |
PRACTICE – 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.
PRACTICE – 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 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:
The plaintiff seeks to tender, under s 64, sub‑ss (3) and (4) of the Evidence Act 2008 (Vic) (the Act), certain paragraphs of a statutory declaration made by Nigel Officer on 8 February 2006 and filed with the Cole Royal Commission, and extracts from the transcript of evidence Mr Officer gave before the Cole Royal Commission. The evidence is sought to be tendered against Mr Flugge and Mr Geary. Under pt 3.2 of the Act hearsay evidence is statutorily defined. Hearsay evidence is prohibited from use save as provided in pt 3.2 of the Act.
Under the hearsay rule, 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.[1] As I said, this is defined as the hearsay rule. Such a fact is referred to as an asserted fact.[2] A representation relevantly includes:
(a) an express or implied representation (whether oral or in writing.)[3]
[1]Section 59(1), the Act.
[2]Section 59(2), the Act.
[3] That is in the dictionary to the Act referred to in s 3.
Under s 59(2A) of the Act, for the purposes of determining, under sub‑s 59(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.
Section 62(1) of the Act, under the heading of, ‘Restriction to “first-hand” hearsay’, provides that:
A reference in this Division (other than subsection (2)), to a previous representation is a reference to a previous representation that was made by a person who had personal knowledge of an asserted fact.
As I indicated this is referred to as first-hand hearsay. Section 62(2) of the Act provides that:
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 that the person saw, heard or otherwise perceived other than a previous representation made by another person about the fact.
This limitation on what constitutes first-hand hearsay is of particular importance, as it limits the ambit of first-hand hearsay that may be led in evidence. It may well be the case that the ambit is narrower than what might have been led in evidence-in-chief.
Section 64 provides an exception to the hearsay rule if the maker of the previous representation is available to give evidence about an asserted fact. Under s 64(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.
Section 64(3) provides:
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.
Under s 64(4) it is provided that:
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.
In this application the plaintiff relies on sub‑ss 64(3)(a) and 64(4). Mr Officer has concluded his evidence-in-chief.
Further, any evidence sought to be tendered by the plaintiff must also satisfy the test of relevance provided in the Act. Under s 55(1), the Act 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.
In this proceeding a fact in issue is whether Mr Flugge and Mr Geary were aware that the IGB had imposed as a term of the contract for the sale of wheat to the IGB; that the contract provide for the inland delivery of the wheat sold in Iraq; and that a fee of US$12 per tonne was to be paid to the IGB, or its nominee, for the inland delivery of the wheat sold. Thus, to satisfy the relevance test, the asserted facts must be evidence that, if it were accepted, would rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding, to wit, the knowledge of Mr Flugge and Mr Geary of the inland transport fee and its payment.
Further, the asserted fact that is sought to be established through Mr Officer’s hearsay evidence must be an asserted fact that Mr Officer had personal knowledge of, that was, or might reasonably be supposed to have been, based on something that Mr Officer saw, heard, or otherwise perceived, other than a previous representation made by another person about the fact.
The first tender is of paragraphs 35, 36 and 37 of Mr Officer’s statutory declaration. The fact asserted is that Mr Officer had discussions about the free in truck contract changes imposed by Iraq with Mr Flugge at Mr Emons’ desk, Mr Officer’s office and in Mr Flugge’s office. In paragraph 35, Mr Officer deposes:
During June 1999, Mark Emons and Dominic Hogan visited Iraq. The substance of matters covered during that visit was recorded in an email I received, amongst others, from Dominic Hogan dated 24 June 1999 (AWB.5073.0125).[4]
[4]See Court Book 1/375.
Although Mr Officer gives evidence of the content of an email sent by Mr Hogan, which is a representation by another person, it is not about the asserted fact. In my opinion, however, it falls into s 59(2A) where the court may have regard to the circumstances in which the representation was made. Also, I take into account the email is otherwise in evidence. I admit that statement. Insofar as he continues, he says in paragraph 36:
On 25 June 1999, I received a copy of an email from Tim Snowball which covered certain matters concerning Iraq (AWB.5054.0278).[5] Both the item under the heading, ‘Free in truck’ in Dominic Hogan’s email and the item under the heading, ‘Contract terms and conditions’ in Tim Snowball’s email dealt with the imposition of a fee of USD12.00 and the necessity to make changes to the contract terms and conditions.
[5]See Court Book 1/379.
I admit the above extract from paragraph 36.
Mr Officer then says in paragraph 36:
This I realised was a significant matter for AWB.
That is a personal comment, it does not disclose any of his personal knowledge as required under the statutory test. That sentence is not admissible.
The next statement at the end of paragraph 36, of his statutory declaration, is as follows:
The payment of inland transport fees had never been done by AWB in any country in the past.
Also, that is a comment and an observation, not based upon any of his personal knowledge.
The statement is not admissible.
In paragraph 37, Mr Officer deposes:
Both Mark Emons and I discussed this between ourselves and we both discussed the nature of these changes with Trevor Flugge, together and on separate occasions.
It was contended that the words ‘this’ and ‘these changes’ were vague. In my opinion, the earlier paragraphs remove any vagueness, and I reject that submission.
The problem with the above first sentence in paragraph 37 is that Mr Officer is purporting to give evidence of what Mr Emons discussed with Mr Flugge. In my view, the sentence is admissible but it should be limited to the fact that both Mr Emons and Mr Officer discussed the nature of these changes with Trevor Flugge together. In my view, it is not clear whether the ‘separate occasions’ that Mr Officer refers to concerning Mr Emons, refer to separate occasions where Mr Officer was alone with Mr Flugge.
I admit into evidence the statement that both Mr Emons and Mr Officer both discussed the nature of these changes with Mr Flugge together.
The second sentence in paragraph 37 provides:
Trevor regularly visited the Marketing Desk and had a long-standing interest in AWB’s relationship with its Middle Eastern customers, including Iraq (as one of AWB’s largest customers).
The observation that Mr Flugge ’had a long-standing interest in AWB’s relationship with its Middle Eastern customers, including Iraq (as one of AWB’s largest customers)’ was a mere comment and was not based on personal knowledge.
The portion of the sentence that says ’Trevor regularly visited the marketing desk’ is admissible.
The third sentence provides:
These discussions occurred at Mark’s desk, in my office and in Trevor’s office.
It is not clear whether Mr Officer is referring to the discussions that Mr Emons had with Flugge in the absence of Mr Officer. In my opinion, the sentence is vague and it is not apparent to me that it is based on personal knowledge as required by the Act.
The third sentence in paragraph 37 is not admissible.
The fourth sentence in paragraph 37 provides:
In all likelihood, I discussed these issues with my fellow members of the Executive Team (including Paul Ingleby, Joanne Martin and Ted Laskie), if not at Executive Team meetings, but informally outside those meetings.
His statement that ’in all likelihood‘ he had those discussions, indicates that Mr Officer does not have personal knowledge of those matters as required by the Act.
The fourth sentence is inadmissible.
The fifth sentence provides:
My discussions with Trevor were regular, given his interest in our relationship with Iraq.
It is not clear from that sentence what his discussions were about and his observation ‘given his interest in our relationship with Iraq’ is just an assumption and a comment and not based on Mr Officer’s personal knowledge.
The fifth sentence in paragraph 37 is not admissible.
The sixth sentence in paragraph 37 provides:
In contrast, I had more general discussions with Murray Rogers.
The statement by Mr Officer that he had general discussions with Mr Rogers is not evidence of what was said by Mr Rogers or himself relevant to the asserted fact.
The sixth sentence in paragraph 37 is inadmissible.
The seventh sentence in paragraph 37 provides:
However, without their support and authority, the contractual changes could not occur.
ASIC also sought to tender paragraph 37 as a representation of the asserted fact that Mr Officer did not have the authority to respond to or accept the IGB request for those changes to the contract terms and conditions without the authority of Mr Flugge and Mr Rogers.
The above statement does not constitute evidence of Mr Officer’s personal knowledge of what Mr Officer saw, heard or otherwise perceived. It is an opinion, or a comment.
The seventh sentence in paragraph 37 is inadmissible.
The eighth sentence in paragraph 37 provides:
In a matter of this significance, I did not have the authority to act on my own initiative, to either respond to or accept the IGB request or to put in train any necessary changes to the contract terms and conditions.
As to his authority, again, that is merely a conclusion or opinion, not evidence of the content of his authority, and even whether he was authorised to make or approve of contracts, it does not fall within the definition of personal knowledge. In my view, it does not satisfy the statutory test under the Act.
The eighth sentence in paragraph 37 is inadmissible.
The ninth sentence in paragraph 37 provides:
For me and the Middle East desk to act on this request, we required authority from both Trevor Flugge and Murray Rogers.
In my view, that sentence is merely an assertion or a comment and it goes beyond the asserted fact. As Mr Dharmananda submitted, it is not linked to the asserted fact. It is not something Mr Officer saw, heard, or otherwise perceived. As indicated earlier, Mr Officer might have been able, in evidence-in-chief, to have given such evidence, but it does not fall within the statutory exception for first-hand hearsay under s 64(3).
The ninth sentence in paragraph 37 is inadmissible.
The tenth sentence in paragraph 37 provides:
Without their authority the contract changes could not occur.
Again, this statement is a mere assertion or comment. It is not linked to the asserted fact, and it is not something Mr Officer saw, heard or otherwise perceived.
The tenth sentence in paragraph 37 is inadmissible.
The eleventh sentence in paragraph 37 provides:
Although I cannot recall the precise discussions, both Mark, (as he told me), and I told Trevor and Murray that the fee had been imposed by the IGB and that we had no choice as if we did not pay, wheat sales would be lost to our competitors.
ASIC also sought to tender paragraph 37 as a representation of the asserted fact that Officer told Flugge and Rogers that the fees had been imposed by the IGB and that AWB had no choice because if AWB did not pay wheat sales would be lost to competitors.
In the eleventh sentence, Mr Officer is giving evidence of what Emons said. Mr Officer does not have personal knowledge of what Mr Emons said, and it is not clear in this sentence the extent to which Mr Officer is relying on what Emons told him.
The eleventh sentence in paragraph 37 is inadmissible.
The twelfth sentence in paragraph 37 provides:
The consequence of rejecting the IGB proposal was that AWB would potentially not be asked to tender for IGB contracts, that substantial tonnages of Australian wheat would either be sold at substantially lower prices or would remain unsold, that Australian farmers would suffer significant financial hardship and AWB’s commercial competitors would move into markets traditionally developed by AWB for its farmers.
In my opinion, that does not constitute evidence of what Mr Officer saw, heard, or otherwise perceived. It is a comment. Mr Officer may have been able to give this evidence-in-chief or he may not have, but he certainly cannot give it under the s 64(3) exception for first-hand hearsay.
The twelfth sentence in paragraph 37 is inadmissible.
The thirteenth and final sentence in paragraph 37 provides:
At no stage did either Trevor or Murray disagree with the contractual changes or the payment of the trucking fees that had been proposed and they understood these reasons.
I was asked to treat and construe that sentence as representing the asserted fact that ‘At no stage did either Trevor or Murray express to Mr Officer their disagreement with the contractual changes or the payment of the trucking fees that had been proposed and they understood these reasons.’
In my view, it is not open to so construe the sentence. Mr Officer is clearly giving evidence of matters which he did not see, hear, or otherwise perceive. Mr Officer’s comment about them understanding these reasons is merely a comment, not evidence.
The thirteenth sentence in paragraph 37 is not admissible.
Before I turn to the transcript, I should go to paragraph 88 of the statutory declaration which reads:
Shortly after this, I started looking for other work. During this period, I received a draft Deed of Release from AWB. In light of the general attitude express by Andrew Lindberg in the discussions I have recalled and in the issues surrounding the Code of Conduct earlier in 2000, I was concerned to ensure that someone in the company did not seek to criticise me for the work I had done while at the company. In this context, my concern was focused primarily on the legality of the payment of agency fees in Pakistan notwithstanding the review undertaken of our arrangements in that market (as I have already outlined), and how the payment of the Iraq transport costs might be characterised. Mark Emons, at pages 1897-1898 of the Transcript was asked whether such payments as these constituted ‘facilitation payments.’ Although I did not think in those terms at the time, I began to realise that the payments may be questionable as a matter of law.
ASIC seeks to tender paragraph 88 as a representation of an asserted fact that ‘Shortly after Officer was made redundant and in relation to a draft deed of release, Officer was concerned to ensure that someone in AWB did not seek to criticise him for the work he had done while at AWB.’ In that context, Mr Officer’s concern was focused primarily on the legality of the payment of agency fees in Pakistan and how the payment of the Iraq transport costs may be characterised.
The reference to ‘the discussions I have recalled’ is not referred to or identified. Also, the evidence of the general attitude expressed by Andrew Lindberg is not admissible evidence. The concerns expressed are not personal knowledge. Mr Officer might have been able to give evidence such as this in-chief, or he may not have, but he certainly cannot give it under s 64(3). It is not the asserted fact, it is evidence on a topic rather than evidence of what he heard or observed. In my view, paragraph 88 does not satisfy the first-hand hearsay exception under the Act.
Paragraph 88 is not admissible.
I now go to page 2316 of the transcript, line 34, to page 2317, line 13. The transcript records:
QThen you say: the nature of the payments to Iraq had been discussed at high levels. Who do you include within the description ‘higher levels’?
AThe chairman and the managing director.
QAt that time the chairman was Mr Flugge?
AYes.
QThe managing director was Mr Rogers?
AYes.
QWho had the discussions with Mr Flugge and Mr Rogers?
AThere were various discussions on this issue. It was a significant change in the way that AWB was contracting with an overseas buyer. Those discussions were done on a more informal basis than on a formal basis, given the nature of the issue. Discussions took place at the marketing desk and also in my office and also in the office of the chairman, as best I recall.
QWere you party to discussions with both the chairman and the chief executive officer?
AI recall being involved in discussions with the chairman.
ASIC tenders this material as a representation of the asserted fact that ‘Officer had discussions with Flugge and Rogers on an informal basis at the marketing desk, in Officer’s office and in Flugge’s office about the payments to Iraq.’
The evidence is not of what Mr Officer saw, heard or otherwise perceived but rather that Mr Officer had a conversation on a particular topic. The context, however, makes it clear that the payments being discussed were the inland transport fee payments. In my view, this falls into the same category as the first sentence in paragraph 37; that is, the subject matter of the discussion is sufficiently defined to satisfy the first-hand hearsay exception.
These above lines of the transcript are admissible.
The second tender of the transcript is page 2318, lines 16 to 25 which read:
QWhat did you say to the chairman about the payment of the $12 a metric tonne?
AWell, as I recall, to the best of my ability, this was an imposition that was placed upon us by the buyer, the Iraqi Grain Board. There was no option. There was no choice. It was $12 or not, or if you don’t make that payment then, of course, there would be no business. That was made very clear. It was in that context that I discussed it with the chairman, and that was the nature of those discussions.
ASIC seeks to tender this as a representation of an asserted fact that ‘Officer told Flugge that there was no option or choice – if AWB did not make the payment there would be no business.’
In my view, this evidence is admissible under the first-hand hearsay exception. I think it is sufficiently precise to satisfy the statutory test.
Lines 16 to 25 of page 2318 are admissible.
As to the third transcript tender, page 2320, line 46 to 2321, line 11, the plaintiff seeks to tender the following evidence:
QWhat did the chairman say to you when you told him about this matter?
AHe would have said this was a necessary part of doing business with Iraq and that the role that we had at AWB was to maximise opportunities and sales returns for the commodities that we were dealing with, and that we should proceed.
QWhen you say ‘he would have said’, is that your recollection of the substance of what he said, or is that something that you have supposed he said?
AThat is the recollection of the substance of what he would have said - of what he said.
ASIC seeks to tender those passages as a representation of an asserted fact that ‘Flugge said in substance that this was a necessary part of doing business with Iraq and that the role we had at AWB was to maximize opportunities and sales returns for the commodities we were dealing with and that we should proceed.’
In my view, that transcript discloses that he has no personal recollection — it does not satisfy me that Mr Officer had a personal recollection of what he has given evidence of. He, therefore, does not have the personal knowledge required.
The transcript extract on page 2320, line 46 to page 2321, line 11, is not admissible.
The next extract of transcript is at page 2321, lines 35 to 37:
QDid you speak to the chairman about the plan to make payments of the $12 per metric tonne through vessel owners?
AI believe so.
ASIC seeks to tender those lines of transcript as a representation of an asserted fact that ‘Officer spoke to Flugge about the plan to make payments of $12 per metric tonne through vessel owners.’
That clearly does not satisfy the personal knowledge test. It was an expression of a belief.
Next is the transcript at page 2321, lines 39 to 41, which reads as follows:
QDid you speak to the chairman about the plan to make payment of the US$12 through Ronly Holdings?
AYes.
ASIC seeks to tender that passage as a representation of an asserted fact that ‘Officer told Flugge about the plan to make payment of US$12 through Ronly Holdings.’
I admit that as it tends to show Mr Flugge knew of payments and Mr Officer appears to agree that a particular conversation took place, which satisfies the test of personal knowledge.
This extract is admissible.
The next extract is item number 11 on the plaintiff’s list, transcript 2322, lines 1 to 5:
QWhat did you say to him in relation to that?
AAs I have explained, the greyness of the matter, the significance of it in terms of its newness in the way that the AWB contracted business, the fact that there were some grey areas with respect to the United Nations.
ASIC seeks to tender that passage as a representation of an asserted fact that ‘Officer told Flugge that it was being considered that Ronly Holdings should be used as a conduit for the payment because of the greyness of the matter, the significance of it in terms of its newness, in the way AWB contracted business, and the fact there was some grey areas with respect to the United Nations.’
It is not apparent where the previous explanation referred to in the phrase beginning ‘As I have explained’ is, so as to inform that answer. As I have said, the evidence refers to other evidence. It appears to be a recitation of what Mr Officer said previously. It seems to be merely a summary of the witness’ recollection of the topic. In my view, it is not admissible under the statutory exception.
The above transcript extract is not admissible.
The final transcript extract is number 12, transcript 2322, lines 5 to 7, which follows the passage above and reads:
AI spoke with him about the need to perhaps distance AWB from making those payments on a direct basis.
ASIC seeks to tender that passage as a representation of an asserted fact that ‘Officer told Flugge about the need to perhaps distance AWB from making those payments on a direct basis.’
Again, that appears to me to be not a statement of what Mr Officer said to Mr Flugge, but Mr Officer’s characterisation or summary of what he said. Perhaps Mr Officer may have been able to give evidence-in-chief of what he said. It is not necessary for me to decide. In my view, that evidence does not fall within the confines of the statutory exception.
The extracted lines 5 to 7 on page 2322 are not admissible.
Mr Geary submits that the evidence which has been admitted which relates to conversations between Mr Officer and Mr Flugge about the inland transport fee and the payment for it, is not relevant to the case against Mr Geary.
ASIC submits that evidence of what the chairman had been informed about the inland transport fee could rationally affect, directly or indirectly, the assessment of the probability of the existence of the fact that Mr Geary had been informed.
In my opinion, evidence of the extent to which the knowledge of the inland transport fee was known within AWB could rationally affect the assessment of the probability of whether or not Mr Geary knew. It clearly would not establish that fact, but the question is whether it could rationally affect the assessment of the probability of a fact in issue. In my opinion, the evidence which I have admitted as against Mr Flugge is also admissible against Mr Geary.
As to the evidence I have found to be admissible, it is submitted that the evidence should be excluded under the court’s discretion under s 135 of the Act.
Section 135 provides as follows:
General discretion to exclude evidence
The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might—
(a) be unfairly prejudicial to a party; or
(b) be misleading or confusing; or
(c) cause or result in undue waste of time; or
(d)unnecessarily demean the deceased in a criminal proceeding for a homicide offence.
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; 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.[6]
[6]The Act, Dictionary, Pt 1.
As to the evidence that I have found admissible, I have not found that s 135 was enlivened to engage my discretion to exclude the evidence.
They are my rulings on the evidence tendered.
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