Eastlings Pty Ltd v Calidu Import Export Pty Ltd

[2020] NSWSC 1041

Supreme Court

New South Wales

Medium Neutral Citation:

Eastlings Pty Ltd v Calidu Import Export Pty Ltd [2020] NSWSC 1041

Hearing dates:

20 - 21 July 2020

Date of orders:

21 July 2020

Decision date:

10 August 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

Determination that desirability of admitting the impugned evidence (to the extent that it was obtained improperly or in contravention of an Australian law or in consequence of an impropriety or of a contravention of an Australian law, such that s 138(1) of the Evidence Act 1995 (NSW) is applicable) outweighed the undesirability of admitting evidence obtained in the way in which the impugned evidence was obtained; leave granted to the plaintiff to rely upon the impugned affidavits (subject to the rulings made on 21 July 2020); costs of the application for leave to rely upon the impugned affidavits reserved; and directions made for the ongoing conduct of the proceeding.

Catchwords:

EVIDENCE — Discretions — Exclusion of evidence — Improperly or illegally obtained evidence

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 57, 58,59, 60

Criminal Code Act 1995 (Cth), s 11.4

Customs Act 1901 (Cth), ss 4, 233, 234, 236, 243T, 243U

Evidence Act 1995 (NSW), ss 63, 64, 67, 135, 138

Cases Cited:

Barker v The Queen (1994) 54 FCR 451

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Bunning v Cross (1978) 141 CLR 54; [1978] HCA 22

Employment Advocate v Williamson (2001) 111 FCR 20; [2001] FCA 1164

Fleming v R [2009] NSWCCA 233

Kadir v The Queen [2020] HCA 1; (2020) 375 ALR 80

R v Eade [2002] NSWCCA 257; (2002) 131 A Crim R 390

R v Grech [2017] NSWCCA 288

R v Ladocki [2004] NSWCCA 336

Ridgeway v The Queen (1995) 184 CLR 1; [1995] HCA 66

Robinson v Woolworths Ltd (2005) 64 NSWLR 612; [2005] NSWCCA 426

Category:

Procedural and other rulings

Parties:

Eastlings Pty Limited (ACN 132 572 911) (Plaintiff)
Calidu Import Export Pty Limited (ACN 165 995 148) (First Defendant)
Joseph Merlo (Second Defendant)
Grace Christine Merlo (Third Defendant)
Calidu Pty Limited (ACN 117 157 525) (Fourth Defendant)

Representation:

Counsel:
C P O’Neill (Plaintiff)
A Fernon (Defendants)

Solicitors:
Company Giles Pty Ltd (Plaintiff)
Otto Stitcher & Associates (Defendants)

File Number(s):

2015/129691

Publication restriction:

Nil

Judgment

1. HER HONOUR: These proceedings were listed before me for hearing commencing on 20 July 2020 (with an estimate of nine hearing days). However, at the outset of the hearing there was an application by the plaintiff, Eastlings Pty Ltd (Eastlings), opposed by the defendants (to whom I will refer collectively as the Calidu entities), for leave to file two affidavits (characterised by Eastlings as being affidavits in reply, though this was disputed by the Calidu entities). The fundamental (but by no means only) opposition to the filing of, and reliance on, the affidavits in question raised an issue as to the admissibility of the evidence having regard to s 138 of the Evidence Act 1995 (NSW) (Evidence Act).

2. Ultimately, following argument and submissions on the issue (for which additional time was allowed in lieu of continuing with the hearing itself on 20 July 2020), I gave leave for the affidavits in question to be filed (with some rulings as to the admissibility of portions thereof), and adjourned the hearing to permit the Calidu entities an opportunity to address that (belated) evidence (see T 68). I indicated at that time that I would provide reasons for the decision to give leave for the filing of the affidavits. These are those reasons.

Background

3. I set out the following background to the present dispute by reference to the pleadings and submissions filed in advance of the hearing, simply to set the context for the leave application in respect of the impugned affidavits. In so doing, I make no findings as to any disputed factual matters (those obviously being for determination at the conclusion of the contested hearing).

4. The substantive dispute between the parties arose out of the acquisition by Eastlings of a liquor wholesale business operated at the relevant time by the fourth defendant (Calidu Pty Ltd) (to which I will refer as Calidu), which was then known as J&J Wholesale Distributors Pty Ltd.

5. The second defendant (Joseph Merlo) is the director and one of the shareholders of Calidu. The third defendant (Joseph’s wife, Grace Merlo) is also a shareholder of Calidu. The first defendant (Calidu Import Export Pty Ltd), the directors and shareholders of which are the second and third defendants, was incorporated on 25 September 2013 (after the completion of the sale of the Calidu business to Eastlings). I will refer to the first defendant as Calidu Import Export.

6. Eastlings acquired the business of Calidu pursuant to a sale agreement dated 5 April 2013 for a purchase price of $2,000,000 plus stock to the limit of $1,500,000. The sale completed in May 2013. On 24 May 2013 (the date of completion of the sale), the second to fourth defendants entered into a deed with Eastlings containing a restraint of trade provision (the Deed). The Deed defined the “Business” as “liquor wholesale business”, namely, a wholesale business that sold liquor to liquor retailers, who in turn on-sold the liquor to consumers. It was in relation to this business that the restraint operated.

7. Proceedings were commenced in this Court by Eastlings, by summons filed on 1 May 2015, in which Eastlings sought orders to enforce the restraint of trade provision in the Deed (which Eastlings alleged had been breached).

8. On 25 July 2017, a statement of claim was filed in the proceedings and on 7 September 2017, a defence was filed. From around August 2017, however, what also emerged were issues as to the volume of goods that had been imported by Calidu (apparently following the service by Eastlings of a subpoena on and production of documents by a customs agent), which led to the obtaining of expert evidence as to the capacity (by weight or volume) of shipping containers (from which, as I understand it, Eastlings will argue that it can be inferred that Calidu had imported undeclared stock into the country.

9. At the commencement of the hearing an amended statement of claim was filed in Court (by consent) by Eastlings on 20 July 2020. By its amended statement of claim, Eastlings seeks damages for misleading or deceptive conduct from the second to fourth defendants (arising out of alleged representations and omissions made by them when the liquor wholesale business was marketed for sale to Eastlings), as well as the damages sought for breach of contract from the first to third defendants (arising out of the alleged post-sale conduct in breach of the restraint of trade covenant in the Deed).

10. In that regard, Eastlings contends that the information memorandum with which it was provided in relation to the sale (and its supporting materials), did not reveal the true financial position of the Calidu business, which it is contended was artificially inflated by “off the books” conduct. Relevantly, it is contended that Calidu had a practice of importing alcohol into Australia and avoiding the payment of excise (see the affidavit sworn 27 April 2018 of Mr Angus Hamilton, one of the directors of Eastlings, at [40]-[43]). It is contended that the importation was done in the same containers that contained declared product and that the practice enabled Calidu to sell cartons of alcohol to its customers at a significantly lower cash price “off the books” as it had avoided the payment of excise. It is said that this was used to “incentivise” customers to buy the business’ other more expensive and less competitive products, which meant that the business’ margins were artificially inflated and unsustainable; and that Calidu’s books were misleading.

11. During the course of case management of the matter, as in the ordinary course, various orders were made including for the service of the evidence on which the respective parties were to rely. Pursuant to those directions, Eastlings served various lay affidavits (from its directors, Mr Angus Hamilton and his father, Mr Graham Hamilton), in response to which the Calidu entities served a number of lay affidavits (including from Mr and Mrs Merlo); and (as adverted to above) expert evidence was filed by both sides.

12. Relevantly, for present purposes, Mr Graham Hamilton (a former solicitor) affirmed an affidavit on 30 April 2018 in which he deposed to meeting and having various discussions in Singapore in August 2013 with Mr Song Hock Kee (also known as Johnny), the sole director and owner of an entity (Windemac Pty Ltd, to which I will refer as Windemac) and of a previous supplier company, J&E Winery, through which the Calidu entities had imported alcohol into Australia. In that 30 April 2018 affidavit, Mr Graham Hamilton deposed to a conversation with Mr Song to the effect that Joseph Merlo “had a system to minimise his costs”; that this involved the shipping of extra cartons of beer, spirits and champagne in containers labelled as beer only “so the extra cartons would not show up on shipping documents”; and that Mr Merlo and Mr Song referred to this stock as “Corona Extra” (see at [25] and further at [26] as to aspects of how Mr Graham Hamilton says Mr Song told him this was done).

13. On 3 September 2019, I directed the Calidu entities to serve any further affidavit evidence on which they intended to rely by 10 September 2019. On 19 November 2019, I listed these proceedings for a nine day trial commencing on 20 July 2020.

14. On 1 June 2020 (see the affidavit sworn 17 July 2020 by Eastlings’ solicitor, Ms Rebekah Giles), the parties appeared before Williams J (before whom the hearing was then listed for hearing) for case management directions. On that occasion, amongst other orders, her Honour directed each party to serve on the other any notices under s 67 of the Evidence Act concerning evidence that that party wished to adduce at the hearing by close of business on 5 June 2020.

15. On 5 June 2020, in accordance with that timetable, Eastlings served a notice under s 67 of the Evidence Act (the hearsay notice) of its intention to adduce evidence of previous representations and to argue that the hearsay rule did not apply to the evidence, in reliance on s 63(2) or alternatively s 64(2) of the Evidence Act. The representations the subject of that hearsay notice were the representations contained in Mr Graham Hamilton’s affidavit affirmed 30 April 2018 and, specifically, the conversations with Mr Song (deposed to at [13], [18], [19], [25] and [26] of that affidavit), as well as representations in an email from Mr Song to Mr Graham Hamilton sent on 17 May 2018 with the subject header “Re: Court proceedings” (which email was annexed and marked “B” to the hearsay notice). I interpose to note that Eastlings also served another s 67 notice in relation to evidence of other representations but that is not relevant for present purposes.

16. Particulars of the basis on which Eastlings alleged that Mr Song was not available to testify concerning the fact to be proved by the evidence of the representation were stated in the hearsay notice as follows:

1.   As at August 2013 Mr Song resided in Singapore.

2.   On 10 March 2016 Mr Song was convicted in Singapore on 48 charges of evasion of excise duty.

3.   On 17 May 2018 Mr Song declined to make himself available to testify in the proceedings. In this regard, annexed and marked “B” [to the hearsay notice] is an email from Mr Song dated 17 May 2018.

17. The email from Mr Song to which reference was made in the hearsay notice included the following statements:

i was surprised that the case of your company & joe & grace is still going on.

when someone informed the australian custom in 2014 it was then I was caught as there was a joint exercise between them and singapore custom.

i still remember it was at that time Gus told me to stop all shipment to him with excess stocks but i was not aware that the situation could land me in jail because the main benefit is not on my side.

i think the person that informed the authorities was all out to get Joe not me but the australian custom need the co operation from singapore custom thus I was involved.

Anyway, i was caught and imprisoned for 30 months …

…

… I’m sorry as i’m still on Parole (program) and cannot travel and even i can i would not want to be involved in your law suit.

18. Shortly after the hearsay notice was served, the Calidu entities served on 12 June 2020 an affidavit that had been sworn (I interpose to note, quite some time earlier) on 29 January 2020 by Mr Song, in which Mr Song responded to Mr Graham Hamilton’s 30 April 2018 affidavit evidence. In that affidavit, Mr Song asserts (at [13]) that all the stock placed in the containers shipped to Mr Merlo was declared; and he denies certain of the conversations to which Mr Graham Hamilton had deposed.

19. In particular, among other things, Mr Song denies that the conversations set out at [25]-[26] of Mr Graham Hamilton’s 30 April 2018 affidavit had taken place and asserts that “nor were any comments made by me to similar effect” (see at [14] of his affidavit). Mr Song has deposed (at [20]) that his business dealings with Mr Graham Hamilton were on the same basis as his business dealings with Mr Merlo (a paragraph that Counsel for Eastlings maintains engages the right to reply to that evidence – T 5.24). Mr Song has also deposed to the case against him in Singapore having nothing to do with the purchase of the business by Mr Graham Hamilton from Mr Merlo or with Mr Graham Hamilton’s later business dealings with him (i.e., Mr Song) (see at [18]); and that it was to do with non-payment of GST and liquor duty applicable in Singapore and not in Australia (see at [19]).

20. The Calidu entities, as I understand it, deny any allegation of being involved in any importation of undeclared liquor into Australia.

21. On 3 July 2020, Eastlings’ solicitor notified the solicitor acting for the Calidu entities of their request that the defendants’ witnesses be made available for cross-examination at the hearing and requested confirmation of arrangements regarding the testimony from witnesses who reside outside of Australia (Mr Song and another witness, Mr Pedro Vidal).

22. On 14 July 2020, the Calidu entities’ solicitor served a notice pursuant to s 67 of the Evidence Act, notifying, among other things, that Mr Song and Mr Vidal were not available to testify given their status as citizens and residents of Singapore and Portugal, respectively. (At the hearing on 21 July 2020, Counsel for the Calidu entities explained that this notice was a precautionary measure and will not now be pressed in relation to Mr Song, it being understood that he will be available to give evidence by audio-visual link – see at T 25.)

23. In response to the (belated) service of Mr Song’s affidavit (noting that the Calidu entities’ further evidence had been due by 10 September 2019 in accordance with the September 2019 directions and, it will be recalled, Mr Song’s affidavit on its face having been obtained and certified under the laws of Singapore on 29 January 2020 but not being served until 12 June 2020), Eastlings then obtained two further affidavits (those being the principal affidavits to which objection was taken at the commencement of the hearing before me), one from each of Mr Graham Hamilton and Mr Angus Hamilton. Both those affidavits were sworn on 19 July 2020 (the day before the final hearing before me was listed to commence) but it was said that they had been served, unsworn, on the Calidu entities’ solicitor late the previous Friday (i.e., on 17 July 2020) (see T 1.42ff, though there was some contest as to when in fact the Calidu entities were on notice of the affidavits – T 2.25ff).

24. In summary, in his affidavit sworn on 19 July 2020, Mr Graham Hamilton has deposed to steps that he says he took (back in 2014) in order to test his then suspicion that it was likely or possible that the defendants had imported undeclared liquor from Windemac (in circumstances where it was said that the trading figures for the business for the financial year ending 30 June 2014 showed a significant reduction in turnover and a reduction in profit compared to the pre-acquisition figures). Mr Graham Hamilton has deposed to the receipt by Eastlings, between November 2014 and January 2015, of five shipments of stock from Mr Song or Windemac which he says contained a total of 1,000 extra non-disclosed cartons of beer (referred to as the “Corona Extra”), and to payments made to Mr Song which he says were for both facilitating the shipment of “Corona Extra” and for payment for the “discounted stock”. Mr Graham Hamilton has deposed that, following this, he knew that it was possible to import undisclosed stock (and did not import any further undeclared stock).

25. Mr Graham Hamilton has further deposed that, following the close of evidence in these proceedings, Eastlings (through its specialist customs and excise legal advisors at VoxLaw Solicitors, who are not the solicitors acting for Eastlings in the current proceedings) made a voluntary disclosure to the Australian Border Force concerning the shipments in question and as to its calculation of the underpayment of customs duty and GST as a result of additional goods being placed in the respective shipping containers while not declared on the shipping documents and subsequently not declared on the Full Import Declarations (FIDs). A copy of the letter by which that voluntary disclosure was made (but not the FIDs themselves) was annexed to Mr Graham Hamilton’s affidavit. The outcome (if any) of that voluntary disclosure is not known.

26. In Mr Angus Hamilton’s affidavit of 19 July 2020 (to which objection was also taken), he has deposed to various telephone numbers, including those on which he says he contacted Mr Song between around May 2013 and around January 2015. He has also annexed bills of lading for four of the “Corona Extra” shipments and a tax disbursement for the fifth such shipment.

27. When the application was the subject of argument on the morning of 21 July 2020 (the scheduled second day of the hearing), Eastlings also sought leave to rely on a further affidavit of Mr Graham Hamilton, sworn 20 July 2020, which provided further detail of his decision to make the voluntary disclosure to the Australian Border Force and in which Mr Graham Hamilton has deposed that neither he nor Eastlings has engaged in such conduct since the time disclosed in his 19 July 2020 affidavit (i.e., since January 2015) (see at [17]). Objection was taken by the Calidu entities to this affidavit as well.

Basis of objection by Calidu entities

28. The Calidu entities objected to the admission into evidence of certain paragraphs of the respective 19 July 2020 affidavits (namely [3]-[10] and [12]-[15] of the affidavit of Mr Graham Hamilton; and [7] and annexures A and B to Mr Angus Hamilton’s affidavit) on the basis that (in the case of Mr Graham Hamilton’s affidavit) this was evidence only able to be given as a consequence of “the illegal act which apparently caused Mr Graham Hamilton’s memory to be refreshed” (namely, as I understand it from oral submissions, to be refreshed as to the relevant conversation with Mr Song in 2014); and (in the case of Mr Angus Hamilton’s affidavit) that the evidence was obtained by an illegal act (namely, evidence of the shipments in which the illegal goods were allegedly transported). As noted, objection was also taken to the admission into evidence of Mr Graham Hamilton’s affidavit sworn 20 July 2020.

29. I interpolate to note that objection was also made to [11] of Mr Graham Hamilton’s affidavit on the basis that it could not be considered evidence in reply and was clearly evidence in chief. Eastlings did not press for that paragraph to be read; and so it is not necessary to deal further with that objection.

30. As adverted to above, the Calidu entities principally relied on s 138 of the Evidence Act and argued that the impugned evidence was obtained illegally or improperly or, alternatively, in consequence of an impropriety or of a contravention of an Australian law.

28. The Calidu entities also relied on s 135 of the Evidence Act on the basis of the prejudice to them if the evidence were to be admitted at this late stage of the proceedings. Ultimately, however, it was accepted that, if an opportunity were now to be provided for the Calidu entities to test the new evidence (and, if they wished so to do, to respond to it), then the s 135 objection would not have as much force. Hence, their objection to this evidence was primarily based on s 138 of the Evidence Act.

29. Eastlings argued that s 138 was inapplicable (for reasons that I will explore in due course) but said that, if it was applicable, then the evidence should be admitted in the exercise of the Court’s discretion (having regard to the mandatory considerations set out in s 138(3) of the Evidence Act.

Relevant principles

33. Section 138 of the Evidence Act provides, relevantly:

(1)   Evidence that was obtained�

(a)   improperly or in contravention of an Australian law, or

(b)   in consequence of an impropriety or of a contravention of an Australian law,

is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained.

…

(3)   Without limiting the matters that the court may take into account under subsection (1), it is to take into account�

(a)   the probative value of the evidence, and

(b)   the importance of the evidence in the proceeding, and

(c)   the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding, and

(d)   the gravity of the impropriety or contravention, and

(e)   whether the impropriety or contravention was deliberate or reckless, and

(f)   whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, and

(g)   whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention, and

(h)   the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law.

34. In Robinson v Woolworths Ltd (2005) 64 NSWLR 612; [2005] NSWCCA 426 (Robinson v Woolworths), Basten JA (with whom Barr J agreed) noted that s 138 of the Evidence Act has a broad scope and is not applicable merely to evidence obtained unlawfully but also to evidence obtained improperly; and that it covers not merely impropriety or unlawful conduct in the acquisition of evidence following an offence, but also conduct which constitutes the offence (see at [21]). His Honour’s comments have been subsequently endorsed in Fleming v R [2009] NSWCCA 233 (see at [18] per McClellan CJ at CL, Grove and R A Hulme JJ).

35. Basten JA, having earlier considered the general law discretion to exclude unlawfully obtained evidence (see at [16]-[20] referring to Ridgeway v The Queen (1995) 184 CLR 1; [1995] HCA 66 (Ridgeway v R)), went on to note (at [22]-[23]):

22 It is clear that s 138 varies the common law in a number of respects: see J Anderson, J Hunter and N Williams, The New Evidence Law: Annotations and Commentary on the Uniform Evidence Acts (2002) Australia, LexisNexis Butterworths, at 510. Nevertheless, s 9 of the Act states:

“9 Application of common law and equity

(1) This Act does not affect the operation of a principle or rule of common law or equity in relation to evidence in a proceeding to which this Act applies, except so far as this Act provides otherwise expressly or by necessary intendment.”

Thus, in relation to s 138, there is no doubt that the statutory rule involves exclusion of evidence, where its terms are engaged, subject to a discretion to admit. The general law rule was framed in terms of a discretion to exclude. Secondly, s 138 is not in terms limited to unlawful or improper conduct on the part of law enforcement authorities. Each of these considerations may be relevant in determining what constitutes “impropriety” for the purposes of s 138 and invite caution in considering whether to apply general law principles without qualification. On the other hand, because the Act does not define the concept of impropriety, it is difficult to perceive any necessary intention on the part of the legislature to vary the principles collected in Ridgeway, derived from earlier Australian authority. Accordingly, those principles should be applied.

23    It follows that the identification of impropriety requires attention to the following propositions. First, it is necessary to identify what, in a particular context, may be viewed as “the minimum standards which a society such as ours should expect and require of those entrusted with powers of law enforcement”. Secondly, the conduct in question must not merely blur or contravene those standards in some minor respect; it must be “quite inconsistent with” or “clearly inconsistent with” those standards. Thirdly, the concepts of “harassment” and “manipulation” suggest some level of encouragement, persuasion or importunity in relation to the commission of an offence: thus, in describing the first category of cases the joint judgment in Ridgeway (at 39) referred to offences being procured or induced.

36. The operation of s 138 was recently considered by the High Court in Kadir v The Queen [2020] HCA 1; (2020) 375 ALR 80 (Kadir v The Queen). The High Court there noted that the section is not limited to acts of law enforcement officers but covers all improperly or illegally obtained evidence. Their Honours said (at [12]-[14]):

12 In the event, s 138 enacts a “discretion” which is wider than the modified Bunning v Cross discretion discussed by the ALRC in the Interim Report. Bunning v Cross is an exclusionary discretion that applies in criminal proceedings and requires the court to balance the desirable goal of convicting wrongdoers against the undesirable effect of giving curial approval, or even encouragement, to the unlawful conduct of those whose task it is to enforce the law . Section 138 provides for the conditional exclusion of evidence obtained by, or in consequence of, impropriety or illegality in any proceeding to which the Act applies. Notably, the exclusion is not confined to evidence that is improperly or illegally obtained by police or other law enforcement agencies. The “discretion” conferred is to admit the evidence, should the court be persuaded that the balance of the competing public interests requires that outcome.

13 As s 138 is not confined to criminal proceedings or to evidence obtained by, or in consequence of, the misconduct of those engaged in law enforcement, the public interests that the court is required to weigh are broader than those weighed in the exercise of the Bunning v Cross discretion. The desirability of admitting evidence recognises the public interest in all relevant evidence being before the fact-finding tribunal. The undesirability of admitting evidence recognises the public interest in not giving curial approval, or encouragement, to illegally or improperly obtaining evidence generally. In a criminal proceeding in which the prosecution seeks to adduce evidence that has been improperly or illegally obtained by the police (or another law enforcement agency), the more focussed public interests identified in Bunning v Cross remain apt.

14 Recognition that s 138 is not confined to evidence obtained by the improper or illegal conduct of the police raises a number of issues. Whether evidence has been obtained improperly in such a case is determined by reference to “minimum standards of acceptable police conduct”. The standard by which the court assesses the impropriety of the conduct of private individuals is less clear. That question is not raised in these appeals; it is common ground that the surveillance evidence was obtained in contravention of Australian law.

Calidu entities’ submissions

37. The Calidu entities submitted that the decision in Ridgeway v R (where the High Court applied the common law discretion to reject evidence procured illegally, such that evidence of an illegal importation of heroin into Australia by law enforcement officers was excluded in the prosecution of a man who was charged with illegal possession of such heroin) was analogous to the facts in the present case, where evidence of the illegal acts undertaken by Eastlings and/or Mr Graham Hamilton is sought to be tendered to prove the involvement of Mr Song in such illegalities.

38. The Calidu entities noted that, in Ridgeway v R, reference was made to the settled principle established in Bunning v Cross (1978) 141 CLR 54; [1978] HCA 22 (Bunning v Cross) as to the discretion to exclude prosecutorial evidence obtained by unlawful conduct by the police (and it was noted that the principles applied in cases such as Bunning v Cross and Ridgeway v R can be applied as a basis to determine whether any impropriety has arisen within the meaning of s 138 of the Evidence Act). It was noted that in Employment Advocate v Williamson (2001) 111 FCR 20; [2001] FCA 1164, Branson J held (see at [79]) that s 138(1)(a) applied to evidence obtained directly as the result of conduct that was improper and that s 138(1)(b) was intended to cover evidence that was obtained indirectly and would not have been obtained but for illegal or improper conduct.

39. The Calidu entities accepted that the public policy concerns applicable in criminal cases (such as Ridgeway v R) do not apply to civil cases as such but submitted that the observations in those cases were informative of the approach to be applied in the present case. They submitted that conduct that involves deliberate (as I interpose to note was clearly the case here) or reckless impropriety or illegality to the obtaining of evidence will ordinarily weigh against admissibility, particularly if it would otherwise be difficult to obtain such evidence (citing Kadir v The Queen at [20]).

40. The Calidu entities contended that the evidence of Mr Graham Hamilton of the importations and the communications and payments with Mr Song, if accepted, was obtained by an illegality. They said that other evidence in Mr Graham Hamilton’s affidavit, being the evidence at [11] (which has not been read) and [15], is evidence obtained in consequence of an impropriety.

41. Reference was made to Robinson v Woolworths (at [41]) and R v Ladocki [2004] NSWCCA 336 (at [47]) (the former involving the illegal sale of tobacco to minors; the latter involving the supply of heroin). The Calidu entities noted that these cases involved evidence of a crime being obtained by a controlled operation by law enforcement authorities and contended that nothing turned on the distinction between evidence being obtained illegally or improperly or in consequence of an illegal act or impropriety as the outcome remained the same (referring to Robinson v Woolworths at [41] per Basten JA).

42. The Calidu entities accepted that they bore the onus of establishing that the evidence was obtained improperly or unlawfully (or in consequence of an impropriety or illegality) but emphasised that, once that is satisfied, the onus rests on Eastlings to establish the evidence should be admitted; and the Calidu entities said in that regard that the only evidence served to satisfy that onus was the affidavit sworn 20 July 2020 of Mr Graham Hamilton attaching further communications with the Australian Border Force in December 2019 and an email prior to the commencement of these proceedings in 2015 (which they maintained did not satisfy that onus. (The Calidu entities’ submissions as to the factors to be considered under s 138(3) of the Evidence Act, if s 138 be found to be enlivened, will be considered in due course.)

Eastlings’ submissions

43. Eastlings contended that the focus of s 138 of the Evidence Act (evident from the wording of s 138(1) of the Evidence Act) is as to how the relevant evidence was “obtained”; not the content of the evidence (that being part of the minimum mandatory evaluation task in s 138(3) of the Evidence Act).

44. Eastlings maintained that s 138 of the Evidence Act was not engaged in relation to the evidence sought to be adduced of Mr Angus Hamilton, on the basis that none of that evidence had been obtained illegally. In respect of the evidence of Mr Graham Hamilton, it was said that none of the conduct in [1]-[11] or [13]-[16] of his affidavit sworn 19 July 2020 could be characterised as improper or in contravention of an Australian law. As to [12], in which Mr Graham Hamilton deposes to the receipt of five shipments of non-disclosed cartons of beer from Mr Song or Windemac, Eastlings accepts that at the time of receipt, those shipments “may have contravened” an applicable Australian law (namely the Customs Act1901 (Cth) (Customs Act)) I note that it could hardly contend for a contrary proposition given the disclosure letter dated 31 January 2020 given to the Australian Border Force (see at Annexure B to Mr Graham Hamilton’s affidavit).

45. However, Eastlings argued that the receipt of the shipments had nothing to do with the “obtaining” of the evidence. It was said (referring to [3] of Mr Graham Hamilton’s affidavit) that the purpose of the shipment was for Mr Graham Hamilton to determine whether it was likely or possible that Calidu, Joseph Merlo and Grace Merlo had imported undeclared liquor from Windemac. It was contended that this had nothing to do with the preparation of evidence for the proceedings (Eastlings’ position being, as noted above, that the matter had only arisen in reply). (I note, however, that there is some tension between this submission and Mr Graham Hamilton’s earlier 2018 affidavit in which he appears to depose to seeking to obtain evidence or investigate what had happened at an earlier stage.) It was submitted by Eastlings that the present case is distinguishable from the body of case law dealing with illegally obtained evidence, particularly in the criminal context.

46. Reference was made to Kadir v The Queen, where it was noted (at [13]) that, in the civil context, s 138 of the Evidence Act involves a balance between the desirability of ensuring all relevant evidence is before a fact-finding tribunal, as against the undesirability of providing curial approval, or encouragement, to illegally or improperly obtaining evidence generally. Eastlings maintained that there was no “process” by which the evidence in this case was illegally or improperly obtained; rather, it was said that this was evidence of an illegal act disclosed in reply so that the Court is fully appraised of all the facts relevant to, in particular, the evidence of Mr Song. It was submitted that, to suggest otherwise, would mean that, for example, where a co-accused decided to give evidence against another, that first person’s evidence would be excluded pursuant to s 138 because it merely disclosed evidence of an improper or illegal act. It was further submitted that an affidavit that voluntarily declares that someone has engaged in illegal conduct might be rendered inadmissible (i.e., an admission or confession of illegal conduct) cannot be said to be obtained unlawfully in that it is evidence that is provided voluntarily (see T 15.7ff).

47. Insofar as the High Court noted in Kadir v The Queen (at [14]) that (in a criminal context) whether there has been improper conduct is typically to be determined by reference to “minimal standards of acceptable police conduct”, Eastlings pointed to the High Court’s recognition that the standard by which a court is to assess the improper conduct of private individuals is less clear (and Eastlings said that this is particularly so where the conduct has since been disclosed voluntarily to the requisite authorities).

48. Eastlings pointed out that the instances where s 138 of the Evidence Act has been used in civil cases are sporadic; and said that, typically, such cases relate to the use of surveillance technology or trespass in order to obtain evidence (referring in that context to Barker v The Queen (1994) 54 FCR 451 where an illegally made recording of a conversation before communications were made to the police about the subject matter of the recording, which was admitted into evidence in later criminal proceedings – see at [478] per Jenkinson and O’Loughlin JJ). Eastlings argued that Mr Graham Hamilton’s account of the relevant conversation with Mr Song disclosed that Mr Hamilton’s involvement did not involve the application of any form of pressure, persuasion or manipulation; but, rather, an acceptance of Mr Song’s “invitation” (to have some of the “Corona Extra”) and a straightforward request made in a telephone call where there was no intrusion on the individual’s rights or freedoms (see T 53.30ff).

49. Again, I will consider in due course Eastlings’ submissions as to the matters to be weighed if s 138 of the Evidence Act is enlivened.

Determination

50. There was no dispute (nor could thereon any view of the matter have been) that it is illegal to smuggle goods into Australia (see s 233 of the Customs Act). In that connection, “smuggle” is defined to mean “any importation, introduction or exportation or attempted importation, introduction or exportation of goods with intent to defraud the revenue” (see s 4 of the Customs Act). Nor was it (or could it have been) disputed that it is an offence intentionally to evade the payment of customs duty (conduct to which Mr Graham Hamilton has deposed he engaged in and which has now been voluntarily disclosed to the Australian Border Force).

51. More specifically, s 234 of the Customs Act makes it an offence to:

(a)    evade payment of any duty which is payable;

…

(d)    do any of the following:

(i)   intentionally make or cause to be made a statement to an officer, reckless as to the fact that the statement is false or misleading in a material particular;

(ii)     intentionally omit or cause to be omitted from a statement made to an officer any matter or thing, reckless as to the fact that without the matter or thing the statement is misleading in a material particular;

(iii)     intentionally give information to another person, knowing that the information is false or misleading in a material particular and that the other person or someone else will include the information in a statement to an officer;

(iv)     intentionally give information to another person, knowing that the information is misleading in a material particular because of the omission of other information that the person has and that the other person or someone else will include the information in a statement to an officer;

…

52. Mr Graham Hamilton’s own evidence is that the payment of customs duty was intentionally evaded and that he (or, through him, Eastlings) intentionally omitted such information from the relevant statements made in relation to customs duty at the time of what he identifies were five shipments of undeclared stock (see Mr Graham Hamilton’s affidavit sworn 19 July 2020, including the disclosure made to the Australian Border Force by VoxLaw Solicitors).

53. As the Calidu entities have noted, there are also accessorial offences of aiding and abetting an offence under s 236 of the Customs Act which are potentially applicable. Further, they have pointed to it being an offence to incite the commission of an offence (see s 11.4 of the Criminal Code Act 1995 (Cth) (Criminal Code)); and that a person who intends the offence incited to be committed is guilty of an offence (s 11.4 (2) of the Criminal Code). Reference was made in that context to R v Eade [2002] NSWCCA 257; (2002) 131 A Crim R 390 where Smart AJ said (at [59]):

59    In Young v Cassells (1914) 33 NZLR 852, Stout CJ, in an oft quoted passage said: “The word ‘incite’ means to rouse; to stimulate; to urge or spur on; to stir up; to animate.” In Massie [1999] 1 VR 542 at 554; (1998) 103 A Crim R 551 at 564, Brooking JA, with whom Winneke P and Batt JA agreed, said of ‘incite’, “common forms of behaviour covered by the word are ‘command’, request’, ‘propose’, ‘advise’, ‘encourage’ or ‘authorise’”. Whether in a particular case what was said amounts to incitement depends on the context in which the words were used, and the circumstances.

54. The Calidu entities also noted that ss 243T and 243U of the Customs Act would apply to the actions of Eastlings making false or misleading statements in respect of FIDs resulting in loss of duty, subject to the application of sub-s 4 of each section.

55. It is necessary, when considering whether s 138 of the Evidence Act is enlivened, to identify the particular evidence that is said to have been obtained either improperly or in contravention of an Australian law (sub-s (1)(a)) or in consequence of an impropriety or of a contravention of an Australian law (sub-s (1)(b)), since that is the evidence that is not to be admitted (unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained).

56. Turning first to Mr Graham Hamilton’s affidavit sworn 19 July 2020, the relevant evidence may be characterised into the following four categories. First, his alleged conversation with Mr Song in around August 2014 in which Mr Graham Hamilton tells Mr Song that “we’re interested in getting some of that Corona Extra you told me about” (see at [4]), and a further alleged conversation with Mr Song in which he says that Mr Song said that, if Windemac arranged the Corona Extra, Mr Song would have to be paid for his involvement but that Mr Song would give Mr Hamilton “a good price to get started” (see at [6]). Second, evidence that Mr Graham Hamilton personally made particular payments to Windemac in Singapore and his understanding as to what those payments were for (and that Mr Song did not want the payments processed through the “usual Eastlings payment procedure”) (see at [8]-[10]); and as to the receipt by Eastlings of the five shipments in question (see at [12]-[14]). Third, as to Mr Graham Hamilton’s recollection that, during one of the said telephone conversations, Mr Song made reference to similar arrangements with Mr Merlo (see at [10]). Fourth, as to Mr Graham Hamilton’s alleged conversation with his son following receipt of the fifth shipment and the disclosure to the Australian Border Force (see at [15]-[16]).

57. As noted, the position of the Calidu entities was that s 138 of the Evidence Act is here engaged because all this is evidence that has been obtained illegally (namely, by the illegal conduct involved in the illegal importation and the arrangements for illegal importation into Australia) or as a consequence of such an impropriety or contravention.

58. The position of Eastlings, as adverted to above, was that there has here been no intrusion on individual rights or freedoms; that Mr Song was not placed in a position of entrapment (even if that were a principle applicable under Australian law, which it is not), since he could exercise his free will at any point; and that the way in which the evidence was obtained does not meet the “obtaining” test in s 138(1) of the Evidence Act (see T 53.43ff).

59. Reference was made by Eastlings to the observations of the High Court in Kadir v The Queen (at [38]) to the effect that s 138(1) of the Evidence Act requires the Court to address the undesirability of admitting evidence obtained by, or in the consequence of, impropriety or illegality “in the way in which the evidence was obtained” (there being in that case a distinction drawn between the way in which evidence was obtained by illegal surveillance and the way in which evidence was obtained under a search warrant obtained following the obtaining of that earlier illegally obtained evidence).

60. It was submitted that the evidence of receipt of the shipments containing undisclosed product (at [12] of Mr Graham Hamilton’s affidavit sworn 19 July 2020) was the only evidence that could possibly be said to have been obtained illegally but that this was not, properly conceived, evidence that had been obtained illegally; rather, it was evidence of what occurred (i.e., of the offence itself) (in essence as a voluntary disclosure or confession as to such an offence).

61. As to Mr Angus Hamilton’s evidence, it was said that none of that to which he had deposed had been obtained illegally – comprising, it was said, simply the provision of telephone numbers by which Mr Song was contacted (said to be for the purposes of testing the method by which he says that Mr Song was to be contacted on a “secondary phone”), and of shipping records for four of the shipments and a disbursement record for the remaining fifth shipment (see [3]-[5] of his affidavit sworn 19 July 2020).

62. Leaving aside the evidence of the telephone numbers (which does not seem to me to have been obtained illegally or improperly, although arguably it may have been as a consequence of the impropriety or contravention to the extent that it identifies the telephone number to which the relevant call(s) were made), the fact remains that the bulk of the evidence that Eastlings here now wishes to adduce is evidence of the fact of the commission by it (and, seemingly, one or more accessorial offences by Mr Graham Hamilton) of a criminal offence (albeit for the purpose, it said, not of proving that there were earlier such offences committed by the Calidu entities, but for the purpose of corroborating the earlier evidence of conversations with Mr Song which are denied by Mr Song; and to demonstrate that importation of undeclared product was indeed possible).

63. The argument of Eastlings to the effect that s 138 of the Evidence Act cannot here be applicable because, if so, it would have to follow that evidence adduced by an offender or co-offender of the commission of an offence would be inadmissible seems to me to pay insufficient regard to the fact that the means by which the evidence in question (in each of the categories identified at [55] above other than the fourth) was here obtained involved Eastlings (through Mr Graham Hamilton) engaging in an illegal act (namely, the conversations to which Mr Graham Hamilton has deposed; the making of payments and receipt of the shipments in question; and the records held by Mr Angus Hamilton of or relating to those shipments). It is not simply evidence of a voluntary disclosure of an offence or confession for the purposes of proceedings referrable to that offence. Nor is it evidence of participation in a joint criminal enterprise in the context of proceedings between co-offenders referrable to that offence.

64. To my mind there is a relevant distinction in that here the evidence is sought to be adduced in the proceeding not to establish the principal offence (the subject of the disclosure) but to establish matters relevant to the credibility of a witness said to be central to allegations in relation to other conduct (that being conduct unrelated in any direct sense to the offending the subject of the impugned evidence. I therefore proceeded on the basis (favourable to the Calidu entities) that the evidence did fall within s 138 of the Evidence Act and hence that it was necessary to consider the mandatory matters provided for by s 138(3) of the Evidence Act and any other relevant matters before admitting the evidence. In other words (other than the evidence of the telephone numbers themselves) I proceeded on the basis that the evidence sought to be admitted was evidence that was obtained illegally or improperly in contravention of an Australian law or, at the very least, as a consequence of such a contravention (such that s 138 of the Evidence Act was enlivened.

Mandatory considerations in the balancing exercise required to be undertaken

65. As set out above, s 138(3) of the Evidence Act sets out a number of matters that I am required to take into account in determining whether the impugned evidence should be admitted. I address the parties’ submissions in relation to each in turn below.

66. At the outset, however, I note that, broadly speaking, Eastlings submitted on this issue that the impugned evidence was relevant to an assessment of the veracity of Mr Song, including his denial of any such conduct of the kind that Eastlings says the conduct demonstrates could take place. Mr Song’s evidence was said to be important to the proceedings because Mr Song is the “international side” of the transaction where the conduct the subject of the proceedings originated. Eastlings submitted that the impugned evidence demonstrates that it was possible, at least in the period after the sale of the business, to undertake the process of under-declaring alcohol shipments to Australia; and that this was a process in which Eastlings had been educated by Mr Song himself. As I understand it, Eastlings will contend that evidence demonstrating the feasibility of the alleged practice might support an inference (if that inference otherwise be available, say by reference to the expert evidence sought to be adduced as to the capacity of the relevant containers) of similar conduct having occurred in the past (although it appeared to accept that such evidence could not itself establish that conduct). Relevantly, in this regard, the Calidu entities accepted that Mr Song’s credibility might be an important issue (see T 42.22).

67. I now turn to the parties’ submissions as to each of the mandatory considerations.

68. First, as to the probative value of the evidence (s 138(3)(a) of the Evidence Act), Eastlings maintained that the evidence was probative of Mr Song’s denial of the earlier conversations. It was noted that there had been a detailed disclosure about the conduct to the Australian Border Force (I interpose here to note that Eastlings does not in the present proceedings seek to read the assertions made in that disclosure as to any previous conduct of Calidu); and it was said that the evidence sets out clearly and with precision the alleged contraventions in which Mr Song was involved (by reference to the relevant shipping records produced in Mr Angus Hamilton’s affidavit sworn 19 July 2020).

69. The Calidu entities, to the contrary, argued that, insofar as the evidence objected to is sought to establish the involvement of Mr Song in the offences admitted to by Mr Graham Hamilton (in respect of which, given the seriousness of such allegations, the principles from Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 would apply). They contended that it was relevant to note that the evidence relies on contested conversations and an incomplete production of records. In that connection, complaint was made that there have not been produced: the transaction records relating to the five shipments (even though it was noted that they appear to have been offered to the Australian Border Force in December 2019 by reference to Annexure A to the affidavit of Mr Hamilton sworn 20 July 2020); the payment records relating to such shipments; the evidence leading to the payments being made or how the payments were calculated; nor the email or other written communications with Mr Song in respect of the shipments. Furthermore, it was said that evidence of only three payments into Windemac’s account has been produced and that the basis for making such payments was not set out. The Calidu entities submitted that Mr Hamilton’s evidence was incomplete, vague and imprecise; and that, on its own, it could not or was unlikely to establish Mr Song’s involvement in the offences to which Mr Graham Hamilton has admitted. Hence it was contended by the Calidu entities that the probative value of the evidence was a factor against its admission. That said, it was at least initially conceded by the Calidu entities that the evidence related to an issue at the heart of the case (see T 2).

70. Second, as to the importance of the evidence to the proceedings (s 138(3)(b) of the Evidence Act), Eastlings contended that, if Mr Song were to be called (as the Calidu entities have confirmed they intend will be the case), then the evidence was critical to a full appraisal of Mr Song’s evidence, including an assessment of his credit and honesty (and, conversely, that of Mr Graham Hamilton).

71. The Calidu entities, to the contrary, contended that (even if the evidence established Mr Song’s involvement in the offences that have been admitted by Mr Graham Hamilton) the evidence could not establish misleading conduct arising from illegal importation of non-disclosed stock by the defendants and that, at best, it could relate only to the credit of Mr Song. The Calidu entities noted that Eastlings relies on expert evidence from Dr Fargher and Mr Preston, who inspected the shipping records, to infer that such conduct occurred. The Calidu entities contended that in those circumstances the evidence is not important in this case and rely on the absence of its importance as another factor against its admission.

72. Third, as to the nature of the offence, cause of action or defence, and subject matter of the proceedings (s 138(3)(c) of the Evidence Act), Eastlings argued that the evidence was clearly pertinent to the cause of action, being the conduct of persons in illegally importing alcohol into Australia. The Calidu parties, while accepting that both the offence and subject matter of the proceedings concerned alleged illegal importation of goods, contended that the alleged offences concerned different facts and different parties; and submitted that this was a neutral factor in respect of its admission.

73. Fourth, as to the gravity of the impropriety or contravention (s 138(3)(d) of the Evidence Act), the Calidu parties contended that the contravention here was very serious (the impropriety involving the actions of a number of parties, including the supplier, the shipper, the Australian Border Force, the transport companies and others, and an intentional act to contravene Australian law). It was said that this was a calculated, intentional act allegedly to seek to obtain evidence for ultimate use in proceedings. The Calidu entities maintained that this was a factor against admission of the evidence.

74. Eastlings, on the other hand, while accepting that every contravention is grave (and indeed accepting that the seriousness of the offences could not be understated – see at T 5), submitted that in the present case the gravity of the offences was limited by time and in value (and it was emphasised that the offences had been reported and had been the subject of an amended duty declaration notice). In that regard, the Calidu entities contended that the disclosure of the offences is not a factor in favour of the admission of the evidence.

75. Fifth, as to whether the impropriety or contravention was deliberate or reckless (s 138(3)(e) of the Evidence Act), Eastlings did not dispute that the conduct was deliberate, but contended that it was not deliberate in the sense of procuring evidence for the trial (rather, it was said, it was for the deliberate purposes of seeing whether it could be done at all). The Calidu entities, on the other hand, maintained that the fact that the contravention was deliberate was a factor against the admission of the evidence.

76. Sixth, as to whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights (s138(3)(f) of the Evidence Act), it was accepted by both parties that this factor is not here applicable.

77. Seventh, as to whether any other proceeding (whether or not in court) has been or is likely to be taken in relation to the impropriety or contravention (138(3)(g) of the Evidence Act), Eastlings argued that whether action will be taken by the Australian Border Force remains a matter for the Australian Border Force, and that there is no possible way the Court could presently determine the weight of this factor.

78. The Calidu entities, on the other hand, argued that, given the absence of evidence of any action taken by the Australian Border Force, it seemed that no other proceeding or action was being taken in respect of the matters admitted to by Mr Angus Hamilton and Mr Graham Hamilton, although conceding that the powers of the Australian Border Force are such that there is potential for action to be taken. The Calidu entities accepted that, in civil cases, the availability of other proceedings in respect of the evidence was less apparent (citing Kadir v The Queen at [16]). The Calidu entities nonetheless submitted that the absence of any action in the present case was a factor against the admission of the evidence.

79. Finally, as to the difficulty (if any) of obtaining evidence without impropriety or contravention of an Australian law (s 138(3)(h) of the Evidence Act), Eastlings maintained that evidence had been obtained legally in respect of similar conduct pre-sale (based on the documents considered by the expert witnesses called by the parties); and submitted that the fact that the evidence could be obtained legally was a factor in favour of admission.

80. The Calidu entities’ position was that the fact that (on Eastlings’ case) evidence of illegal importation could be obtained from a review of importation documents and reliance on the information contained on such documents was a factor which tended against the admission of the evidence. The Calidu entities further submitted that, even if evidence of hardship in relation to the obtaining of the evidence existed, given the deliberate character of the actions taken, the fact that the evidence could have been obtained lawfully was a factor against the admission of the evidence (Kadir v The Queen at [20]).

81. A further issue raised by the Calidu entities as being relevant to the exercise of the discretion whether to admit the evidence (as adverted to above in the context of its objection based on s 135 of the Evidence Act) was the impact of the admission of the evidence on the conduct of the hearing. The Calidu entities made clear that they would seek an adjournment of the hearing to respond to the evidence if it were to be admitted. They submitted that an adjournment at this stage would be contrary to the just, quick and cheap resolution of the real issues in dispute (referring to ss 56-60 of the Civil Procedure Act 2005 (NSW)).

82. In that regard, the Calidu entities identified a veritable raft of steps that it was said would need to be undertaken in order to provide a response to such evidence. These included the stated need to have subpoenas issued for banking and accounting records relating to receivables and supplier payments (the records in respect of which one or more of the experts had identified a need) and actual sales of the business, along with bank statements for all known accounts of the business, all invoices issued by the business, all remittance advices received by the business, all documents with regard to the payment of importation taxes, financial statements, accounts payable, accounts receivable, lists of sales by customer, listings of purchases by the supplier, ATO running balances of the business, any contracts entered into, company tax returns for all of the periods in question and all documents from Customs and the Australian Border Force with regards to fines and assessment notices.

83. In particular, the Calidu entities foreshadowed issuing: a subpoena to Pauls Customs (or other customs agents) and/or a Notice to Produce to Eastlings for production of all transaction records relating to the five shipments and any payment communications concerning those five shipments; a notice to produce for the documents identified by the accounting experts and all communications with Mr Song in respect of the relevant shipments the subject of the allegations; a subpoena to the National Australia Bank for all payment communications and other records relating to the three payments identified in Mr Graham Hamilton’s affidavit sworn 19 July 2020; a subpoena to the Commonwealth Bank of Australia for Eastlings’ payment records and communications relating to the payments made for the stock disclosed in the relevant transactional documents concerning the five shipments; attempts to obtain Mr Song’s own records (seized by the Singapore authorities in respect of his earlier prosecution and conviction); and a subpoena to Customs and/or the Australian Border Force for relevant documents concerning disclosures by Eastlings and action, if any, taken by them.

65. The Calidu entities also foreshadowed seeking an affidavit from Mr Song in response concerning pricing and his obtaining and supply of stock (requiring the assistance of a solicitor in Singapore to obtain such evidence), along with affidavits in response from Mr Merlo and Mrs Merlo to such of the matters that are admitted into evidence and pertain to them.

66. It was said that the above steps would take at least six to eight weeks, assuming that production of documents in answer to subpoenas and notices to produce was made readily available (and noting that the availability of Mr Song’s own records, and the time to find and obtain them if they were available, was not known).

Determination

86. I have referred above to the consideration by the High Court in Kadir v The Queen as to the principles applicable where s 138 of the Evidence Act applies. At [37], their Honours said:

37 The gravity of the contravention (factor (d)) and the difficulty of obtaining evidence lawfully (factor (h)), along with whether the impropriety or contravention was deliberate or reckless (factor (e)), are overlapping factors. In the circumstances of this case, the trial judge did not err in failing to weigh the s 138(3) factors separately in relation to the first video-recording. His Honour [the trial judge] was right to find that each video-recording was the product of a serious contravention of Australian law. The seriousness of the contravention was in each case the greater because the recording was made in deliberate contravention of the law with a view to assembling evidence which it was believed the proper authorities would be unable to lawfully obtain. To the extent that it was more difficult to lawfully obtain evidence of live baiting before the first video-recording was made, this was a factor which weighed against admitting it. There is no suggestion that the trial judge erred in his assessment of the other s 138(3) factors. His Honour's determination that none of the surveillance evidence is admissible is correct.

87. At [40], their Honours noted that:

40 As the Court of Criminal Appeal observed, s 138 does not enact the doctrine that prevailed in the United States, requiring the exclusion of the “fruit” of official illegality unless the impugned evidence was derived “by means sufficiently distinguishable to be purged of the primary taint”. Section 138 provides for the exclusion of evidence obtained by, or in consequence of, impropriety or illegality, unless the product of balancing the competing public interests favours admitting the evidence. The trial judge’s analysis of the admissibility of the search warrant evidence and the admissions did not go beyond satisfaction of the causal link between the evidence and the contravention of the [Surveillance Devices Act 2007 (NSW)]. The causal link engages s 138, but the weighing of the competing public interests under s 138(1) involved considerations which are not the same as those applying to the admissibility of the surveillance evidence.

88. Their Honours considered that the causal link between the contravention (the unlawful surveillance) and the search warrant evidence (obtained by a regulator acting lawfully and without prior knowledge of the contravention, albeit that it was procured on the strength of the surveillance evidence) was tenuous, a consideration which was capable of affecting the weighing of the public interest in not giving curial approval or encouragement to the unlawful conduct.

89. Their Honours noted (at [42]) that none of the s 138(3) factors can be considered in isolation, observing that evidence may possess high probative value but not be important in the proceeding in a case in which other equally probative evidence is available to the prosecution, and that the weighting of the factors that are concerned with the impropriety or illegality to the balancing of the public interests might differ as between the different classes of evidence in that case.

90. In the present case, balancing the respective mandatory factors at the hearing of the application, I came to the following conclusions.

91. First, that the probative value of the evidence (and hence its importance to the proceedings) lay in its capacity to affect the assessment of Mr Song’s credit (in particular, his denial of the conversations to which Mr Graham Hamilton had deposed); and, in that connection, in circumstances where the credit of Mr Song was put as being a central issue in the proceedings (and the Calidu entities accepted that the conduct in question lay at the heart of the issues in the case), the probative value of the evidence on that issue was high (even if, as the Calidu entities asserted, the evidence sought to be relied upon in relation to the five shipments in question was incomplete). Furthermore, while not capable of establishing the occurrence of a practice of the same kind during the period before the sale (not least in the absence of any application to rely on this as tendency evidence), I see some force to a submission that the evidence may be capable of supporting an otherwise available inference (if there be one) that may, or may not, fall to be made in the disposition of the issues in the proceeding. Therefore, the first two of the s 138(3) factors pointed in my opinion towards the admission of the evidence.

92. Second, and this was not disputed, that the offence in question was a very serious one (involving the illegal importation of goods into Australia) and, though pertinent to the cause of action here being maintained, I concluded that the gravity of the impropriety or contravention and its deliberate nature were matters pointing against the admission of the evidence.

93. I remain concerned that vigilantism (taking the law into one's own hands), even for laudable reasons, cannot and should not be encouraged (see R v Grech [2017] NSWCCA 288 at [111]). In that regard, I did not accept the suggestion that, if the conduct had been engaged in for the purpose of seeing whether it could be done at all (and not at that time with the view to procuring evidence for the hearing), this would necessarily have assisted Eastlings. Rather, I considered that the fact that the contraventions were both serious and deliberate pointed strongly against the admission of the evidence.

94. That said, as noted above, the offences have been voluntarily disclosed; and Eastlings (and one or more of its directors, to the extent that either was involved in the contraventions) remains liable for potential sanctions or penalties. I considered that the fact that no steps may yet have been taken in relation to the contravention did not point towards the rejection of the application to admit the evidence. There remains the potential for such action to be taken and it can readily be inferred that Mr Graham Hamilton was made aware of this before making the voluntary disclosure through VoxLaw Solicitors. I concluded that (though not a determinative factor) the voluntary disclosure of the offences weighed in favour of (rather than against) the admission of the evidence.

95. Finally, as to the difficulty of obtaining the evidence without impropriety or contravention of an Australian law, in one sense it may be axiomatic that the best way of establishing the possibility of importing undeclared goods into Australia via a particular practice (here, the alleged “Corona Extra” procedure) is to attempt to do so (which is what is said here to have happened) but to the extent that Eastlings’ own case (up to the admission of this evidence) was that illegal importation could be inferred from other evidence (such as a review of importation documents and the expert evidence that it proposes to adduce), then it cannot be said that committing a serious offence in order to put this beyond doubt would warrant the admission of the evidence. I, therefore, considered this at best as a neutral factor but more likely as pointing against the admission of the evidence.

96. Balancing the above matters, I ultimately concluded that the desirability of admitting the impugned evidence (to the extent that it was obtained improperly or in contravention of an Australian law or in consequence of an impropriety or of a contravention of an Australian law, such that s 138(1) of the Evidence Act is here applicable) outweighed the undesirability of admitting evidence obtained in the way in which the impugned evidence was here obtained. I accepted that the evidence was likely to be critical to the assessment of the credit of Mr Song (which it appears to be conceded will go to an important issue in the proceedings, namely the conversations to which Mr Graham Hamilton has deposed and hence as to an assessment of Mr Graham Hamilton’s own credit). I concluded that, despite the undoubted gravity and deliberate nature of the contraventions, the fact that there had been a voluntary disclosure of the offence to the relevant authorities at least to some extent ameliorated this. Furthermore, it was relevant to note that Mr Graham Hamilton (a former solicitor, which makes the offence all the more surprising) has deposed that he will not repeat such conduct (and I was prepared, at least at this stage, to accept at face value this as genuine – though that is, obviously, no more than a preliminary view and is subject to any cross-examination that might ensue if he is ultimately challenged about this or other matters in the witness box).

97. As to the impact of the admission of the evidence at this late stage of the proceedings, while that would otherwise have been a strong factor against the admission of the evidence, I was concerned that the Calidu entities had obtained the affidavit from Mr Song at the end of January this year but chose not to serve it until after the hearsay notice had been served by Eastlings. That was a legitimate forensic decision on their part but it cannot be gainsaid that it contributed to the late stage at which the application for leave to adduce the impugned evidence was made by Eastlings. True it is, as the Calidu entities have submitted, there seems also to have been a forensic decision made by Eastlings (namely, not to deploy the evidence of the illegal importations until after the close of the evidence in the case) (and it was not made clear when Eastlings’ legal representatives were first appraised of the evidence – a matter said by Eastlings not to be relevant to the present determination).

98. On the one hand, therefore, Eastlings has seemingly chosen not to adduce evidence of which it has been aware for some time (indeed, since before the commencement of the proceedings), perhaps to avoid having to disclose the commission of the offences, until, quite literally, the eve of the hearing. On the other hand, the Calidu entities have seemingly chosen not to deploy the evidence of Mr Song for nearly six months (apparently relying on their ability successfully to raise an objection on the basis of hearsay to the relevant portion of Mr Graham Hamilton’s 30 April 2018 affidavit). Suffice it to say that, however legitimate these respective forensic decisions, neither side has covered itself with glory in terms of the just, quick and cheap resolution of the real issues in dispute between them.

99. Ultimately, I concluded that, in circumstances where it was possible to alter arrangements for the duty list in the Court’s diary (albeit at no little inconvenience to the Court) so as to provide the Calidu entities with an opportunity to test the late evidence but also to ensure that delay to the hearing was minimised, it was in the interests of justice overall that the evidence be admitted (subject to the particular rulings I made as to parts of the affidavit evidence) having regard to the conclusion that I had reached that the desirability of admitting the impugned evidence (to the extent that it was obtained improperly or in contravention of an Australian law or in consequence of an impropriety or of a contravention of an Australian law, such that s 138(1) of the Evidence Act is here applicable) outweighed the undesirability of admitting evidence obtained in the way in which the impugned evidence was obtained (see [96] above). I made orders accordingly.

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Decision last updated: 10 August 2020