Idoport Pty Limited v National Australia Bank Limited and 8 Ors; Idoport Pty Limited and Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited [16]

[2000] NSWSC 1250

CITATION:	Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited [16] [2000] NSWSC 1250
FILE NUMBER(S):	SC 50113/98; 50026/99; 3991/00
HEARING DATE(S):	28/11/00, 29/11/00, 30/11/00
JUDGMENT DATE:	4 December 2000
PARTIES :	Idoport Pty Limited (Plaintiff) Market Holdings Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	JJ Garnsey QC, RC Titterton, R Alkadamani (Plaintiffs) TF Bathurst QC, JR Sackar QC, JA Halley (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiffs) Freehill Hollingdale & Page (Defendants)
CATCHWORDS:	Practice and Procedure - Objections to admissibility of statements - Standard Directions given to be applied to all objections taken to statements of over 130 witnesses.
LEGISLATION CITED:	Evidence Act 1995
CASES CITED:	Ampolex Ltd v Perpetual Trustee Co. (Canberra) Ltd, Supreme Court of NSW, unreported, Ashington Piggeries v Christopher Hill [1972] AC 441 Australian Broadcasting Corporation v XIVth Birtchnell v Equity Trustees Executors and Agency Co Ltd [1929] 42 CLR 384 Commonwealth Games Ltd (1988) 18 NSWLR 540 Codelfa Construction Pty Ltd v State Rail Authority (1981) 149 CLR 337 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977) 138 CLR 423 Gissing v Gissing [1971] AC 886 Heimann v The Commonwealth (1938) 38 S.R.(NSW) 691 H G v The Queen (1999) HCA 2 Prenn v Simmonds [1971] 1 WLR 1381 Reardon Smith Line v Hansen-Tangen (1976) 1 WLR Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd (1979) 144 CLR 596 Trust Company of Australia Ltd v Perpetual Trustees WA Ltd Supreme Court of New South Wales [Supreme Court of New South Wales unreported 18 Sep 1996]
DECISION:	DIRECTIONS ON ADMISSIBILITY GIVEN IN STANDARD FORM

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION - COMMERCIAL LIST

EINSTEIN J

4 December 2000

50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS

50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS

3991/00 IDOPORT PTY LIMITED (“JMG”) v NATIONAL AUSTRALIA BANK

DIRECTIONS ON ADMISSIBILITY

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION - COMMERCIAL LIST

EINSTEIN J

4 December 2000

50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS

50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS

3991/00 IDOPORT PTY LIMITED (“JMG”) v NATIONAL AUSTRALIA BANK

Directions on admissibility 1    It is common ground that the statements sought to be relied upon in these proceedings are voluminous spanning over 130 witnesses. There are numerous objections to sections of those statements. Unless a practicable regime was set in place dealing seriatim with those objections, those objections would literally take months to work through. 2    In those circumstances the parties originally agreed to endeavour to throw up a number of examples of the evidentiary materials to which objection is taken so that rulings in principle could be given. It was hoped that once those rulings would be given, the parties would be able to agree upon the application of those rulings to many of the objections taken across the statements. Unfortunately the parties, but more particularly the defendants, took blanket objections to enumerable sections of the first statements for examination in a manner which failed to differentiate between the serious and substantive objections and the insubstantial objections. This has the result that the court is simply not able to work through just which objections should be treated as serious requiring careful attention and which other objections should be disallowed as a matter of course, without expending an enormous amount of time. Hence the Court must of necessity become involved in a case management regime to permit the calling of evidence to proceed without the proceedings becoming bogged down for months in the objection ruling area, in many cases without proper justification. 3    The purpose of these directions is to furnish an overview of the general approach to be taken to admissibility questions. Plainly these directions cannot be exhaustive and there are likely to be a number of further questions of principle requiring determination and in a number of instances objections to specific sections of statements which will require to be adjudicated upon. The Court is not however obliged to hear the parties on all objections before ruling on objections. 4    To my mind the court is in a position at particular points in time through the hearing to accommodate difficulties which the parties may wish to raise relating to questions of admissibility. The first and generally preferable such point in time is when the relevant witness, whether a witness for the plaintiffs or a witness for the defendants, assumes the witness box. 5    The second such point in time is at the point where the plaintiffs propose to close their case. At that point the defendants, if uncertain as to whether any and if so which portions of the plaintiffs’ statements are to be regarded as admitted on which bases, may seek clarification of that matter. The same position will obtain where the defendants propose to close their case. Whilst I would certainly trust that that form of clarification in the vast majority of situations would not require or permit the party which had called the witness to obtain leave recall a particular witness on a question of admissibility, nor permit the other party to seek to further cross-examine a particular witness, I can foresee that there may be some circumstances in which some such exercise may in fact be required. 6    The final such point in time is during final address when submissions may be put by both parties as to admissibility on any specifically identified areas expressly reserved for determination in the final judgment. 7    It is convenient to commence by identifying the issues.

The plaintiffs’ pre-contractual misrepresentation case.

8    The issues thrown up by the plaintiffs’ pre-contractual misrepresentation case are in general terms as follows:

(a) whether the representations alleged were made either expressly or by implication [“falsity”]

(b) whether the misrepresentations were misleading or deceptive or likely to mislead or deceive

(c) reliance

(d) damages

The making of the representations

9    Evidence which is plainly relevant includes the conversations and documents which on their face are said either to establish or to rebut the making of the representations. Internal documents or statements by relevant persons which would constitute admissions of the parties, either going to proving that the representations were made or alternatively going to negate the making of the representations, may well be admissible, depending on the form in which the alleged admissions appear and depending upon other criteria going to the admissibility of the admissions. Evidence which, whilst not constituting admissions, is relevant to the making or non making of the representations, would be admissible depending again upon form.

Falsity

10    To the extent that (irrespective of the proper construction of the contracts later entered into) the post-contractual material is relied upon to establish that the representations were or were not misleading or deceptive, such evidence will be admissible. To a considerable extent evidence of these matters is likely to be the same as or likely to overlap with, evidence which will also be admissible in relation to issues going to breach of contract.

Reliance

11    Appropriate officers of the plaintiffs may give admissible evidence that but for the making of the representations they would not have committed the plaintiffs to the subject contracts. In relation to the same area, material will be admissible from which the court can draw an inference that such officers did not rely upon the representations in entering into the subject contracts. 12    In this area evidence of the state of the Ausmaq system up to contract and evidence of the financial position of Ausmaq is relevant as material forming a background against which to test the assertions made by officers of the plaintiffs that but for the representations, they would not have entered into or would not have committed the plaintiffs to enter into the agreements.

Damages

13    The loss of opportunity case entitles the plaintiffs to adduce evidence in proper form showing that opportunities to sell, market or develop the Ausmaq system existed elsewhere and were at the material times available to be exploited. In the same vein the defendants are entitled to adduce rebuttal evidence:

(1) in an attempt to show that any identified potential opportunity for the sale, marketing or development of the system elsewhere was illusory

(2) in an attempt to show that, having regard to the suggested unsuccessful attempts of the relevant plaintiffs or their officers to interest other companies in acquiring the Ausmaq system prior to entering into the subject contracts, it cannot be said on the balance of probabilities that any opportunity of value was lost.


The Contract Case

Construction

14    A principal primary issue in the proceedings concerns the proper construction of the Consultancy Agreement and the Restructuring Agreement. 15    Both parties have addressed detailed submissions in the course of their opening addresses going to the principles which inform the circumstances in which and the reasons why the court may examine material extrinsic to written contracts for the purpose of construing those contracts. 16    It does seem to be tolerably clear from the authorities and accepted by the parties that extrinsic evidence is admissible to establish the subject matter with which a contract is concerned. It has been said that in a commercial contract it is right that the court should know the commercial purpose of the contract and that this in turn presupposes knowledge of the genesis of the transaction, the background, the context, and the market in which the parties are operating. The court is to place itself in thought in the same factual matrix as that in which the parties were. Hence evidence of the factual background known to the parties at or before the date of the subject contracts including evidence of the genesis and objectively the aim of the transaction may be admitted.

[ Reardon Smith Line v Hansen-Tangen (1976) 1 WLR at 995-997 per Lord Wilberforce; Prenn v Simmonds [1971] 1 WLR 1381 at 1384-1385 per Lord Wilberforce; Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd (1979) 144 CLR 596 per Mason J at 606; Codelfa Construction Pty Ltd v State Rail Authority (1981) 149 CLR 337 per Mason J at 348; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977) 138 CLR 423 at 429 per Mason, Stephen and Jacobs JJ]

17    The particular problem which requires to be treated with in these proceedings goes to evidence of prior negotiations. In this regard it must be borne in mind that the general test of objectivity is pervasive in the law of contract. The relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that parties words or conduct notwithstanding that he/she did not consciously formulate that intention in his/her own mind or even acted with some different intention which he/she did not communicate to the other party.

[ Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 per Gleeson CJ; Gissing v Gissing [1971] AC 886 per Lord Diplock; Ashington Piggeries v Christopher Hill [1972] AC 441 at 502 per Lord Diplock]

18    The particular focus here has been on whether and if so to what extent and upon the basis of what principle the court may admit into evidence:

(1) communications passing between the parties prior to the entry into of the subject contracts or

(2) internal communications made prior to the entry into the subject contracts.

19    I do not see that it is necessary at this early stage in the proceedings for the court to finally determine questions of admissibility of communications of this type in relation to the issue of the proper construction of the contracts. 20    Factors of relevance to the decision not to finally determine such questions at this time would appear to include the following:

(1) The fact that subject to questions of form, most of these communications will in any event be admissible as relevant both to the plaintiffs pre-contractual misrepresentation case as well as to the defendants first Cross-claim pre-contractual misrepresentation case.

(2) The fact that the plaintiffs seek to plead that individual defendants participated and were together involved in implementing particular strategies and in particular conduct which is complained of. In short the plaintiffs’ claims extend to allegations that a number of defendants had, or were acting in furtherance of, a common purpose.

(3) The fact that section 57 of the Evidence Act 1995 in dealing with the power of a court to admit evidence provisionally, sanctions a widening of the circumstances in which evidence may be admitted subject to relevance.
[cf Rolfe J, Ampolex Ltd v Perpetual Trustee Co. (Canberra) Ltd , Supreme Court of NSW, unreported, 7 May 1996]

21    The convenient course, as it seems to me, is for the court to reserve for decision as part of the final judgment, the question of whether any and if so which of the pre-contractual communications is admissible for the purpose of the proper construction of the contracts. 22    I note in this regard that both parties as I understand the position, accept for the purposes of their respective cases that in a number of respects the Consultancy Agreement and the Restructuring Agreement throw up ambiguities. Submissions will be taken in final address as to the relevant principles which arguably establish:

(a) that evidence of the surrounding circumstances in which a contract was made, including evidence of mutually known or notorious facts and evidence of the common commercial objectives or of the genesis of a transaction may, depending upon the particular circumstances which obtain in relation to specific items of evidence, be admissible to resolve an ambiguity in the language of a written contract.

(b) that extrinsic evidence is admissible to show that a particular contractual interpretation or a particular implied term which might otherwise arise was specifically considered and rejected by the parties.

(c) that extrinsic evidence is admissible to show that the words which have one common English meaning were used in a sense peculiar to a particular business or industry.

23    There is then a question as to the principle which informs the extent of admissibility of evidence extrinsic to the written contract when a party pleads the existence of an implied term. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981) 149 CLR 337 Mason J.(with whose judgment in this regard Stephen J. agreed) at 353 asserted that “in making the inquiry whether a term is to be implied the court is no more confined that it is when it construes the contract. For the implication of a term is an illustration of the process of construction, though differing from the more orthodox ascertainment of the meaning of a contractual provision”. In expressing this view His Honour rejected the more restrictive approach to construction exemplified by the following statement of Jordan C.J. in Heimann v The Commonwealth (1938) 38 S.R.(NSW) 691 at 695:

“In order to justify the importation into a contract of an implied term which is not to be found in the express language of the contract when properly construed, and is not annexed by some recognised usage, or by statute or otherwise, it is essential that the express terms of the contract should be such that it is clearly necessary to imply the term in order to make the contract operative according to the intention of the parties as indicated by the express terms. It is not sufficient that it would be reasonable to imply the term: Bell v Lever Brothers Ltd…It must be clearly necessary. And the test of whether it is clearly necessary is whether the express terms of the contract are such that both parties, treating them as reasonable men-and they cannot be heard to say that they are not-must clearly have intended the term, or, if they have not adverted to it, would certainly have included it, if the contingency involving the term had suggested itself to their minds…”
[per contra Brennan J at 406 expressing the view that the above passage from the judgment of Jordan C.J. should be accepted as a correct statement of the principle]

24    The defendants in opening address have accepted that the plaintiffs have a legitimate entitlement to adduce evidence seeking to prove ‘objective facts’ known to the parties said to have had a bearing upon the implied term case sought to be propounded by the plaintiffs. 25    The plaintiffs however apparently seek to go further in having submitted in their opening address inter alia that they are entitled to adduce evidence of pre-contractual communications by the following route:

“As containing statements or admissions as to the factual matrix of the Consulting Agreement and the Restructuring Agreement, including the subject matter of the Consulting Agreement and the Restructuring Agreement and the common assumptions of the parties to those agreements, and the background, object, context and commercial purpose of the Agreements, in the objective sense of what reasonable persons in the position of the parties would have had in mind to found the implications of terms implied in fact in the Consulting Agreement “
[MFI P29 paragraph 3.5]

26    There may well be a tangible divide between on the one hand, the emphasis of the defendants upon the admissibility only of ‘objective facts’ known to the parties and on the other hand, the emphasis of the plaintiffs upon the admissibility of so-called ‘common assumptions of the parties’. To give some tangible examples,

(a) a question may arise as to whether or not the perceived value of the shares and intellectual property rights assigned under the Restructuring Agreement (assuming there to have been such perceived value) may be said to have been a matter of fact objectively known to the parties or a so called ‘common assumption of the parties’.
(b) a question may arise as to whether or not matters such as the importance of and/or ease of adding additional modules to the Ausmaq Service may be said to have been matters of fact objectively known to the parties or to have been common assumptions of the parties.

27    If, as I doubt, the plaintiffs have in mind an argument that the Court ought regard as admissible, evidence of the privately reached [in the sense of non communicated] subjective states of mind of the parties as to hoped for benefits to be obtained following the entry into of a contract, I make plain that at this stage in this interlocutory judgment I find difficulty with this proposition. A close question may however arise as to the admissibility of evidence, as for example a contemporaneous note, which is relevant to the issue of whether or not the parties in fact had a communication about such a matter. These are however the very type of admissible issues which in my view are appropriate for adjudication only on the occasion of the handing down of a final judgment. 28    In the result it will be necessary in the final judgment for the court to identify in respect of particular documents and conversations, the extent to which, if at all, this evidence is to be admitted on areas going to contractual construction. To my mind it is not presently necessary that this decision be made at this early stage in the proceedings particularly as later evidence may arguably bear upon the admissibility questions.

Breach of contract

29    Essentially the pleadings throw up three central issues namely:

(1) whether the alleged conduct of the defendants said to amount to the breaches of contract in fact occurred

(2) whether it they did occur this was due to default on the part of the defendants

(3) if affirmative to (1) and (2),whether such default constituted a breach of contractual obligation

30    Subject to questions of form it seems that most of the material comprising evidence of the dealings between the parties following contract in the particular areas where conduct is alleged to have been a breach of contract will be admissible.

Causation and Damages

31    The plaintiffs are entitled to adduce evidence in the attempt to prove that but for the alleged breaches of contract, the opportunities asserted to have been lost were in fact lost. Hence the plaintiffs are entitled to adduce evidence in an attempt to show what ought to have been done in compliance with the pleaded contractual obligations, what the state of the Ausmaq system would, on the plaintiffs’ case, have been had the defendants contractual obligations been complied with, and in relation to damages, to prove that had those things been done the opportunity now claimed would have existed. 32    Plainly the defendants are entitled to seek to rebut evidence of this nature. 33    In terms of remoteness of damage issues the plaintiffs are entitled to adduce evidence that the defendants were aware or ought reasonably to have been aware that failure to act in the manner posited by the plaintiffs breach of contract case would have led to particular identified opportunities being lost. Likewise the defendants are entitled to adduce evidence to rebut this proposition.

The Fiduciary Obligation Case

Creation of a fiduciary relationship/ fiduciary obligations

34    The plaintiffs fiduciary obligation case will necessarily permit a wide ambit of admissible evidence to be adduced. As Dixon J (as His Honour then was) said in a partnership case, Birtchnell v Equity Trustees Executors and Agency Co Ltd [1929] 42 CLR 384 at 408 :

"The subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking for which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm".

35    Notwithstanding the issues which arise in relation to questions of quasi joint venture/partnership and the like, the allegations of dependency, dominance and the reposing of confidence by JMG in NMG and NAB following the alleged making of particular representations appear to open a very wide spectrum of admissible evidence covering the dealings between the parties both pre-contract and post contract.

Breach of fiduciary obligation

36    It appears that the evidence generally admissible in relation to the alleged breaches of contractual obligations will also be admissible in relation to the alleged breaches of fiduciary obligations and this particularly because the plaintiffs rely upon the very same factual matters as constituting both classes of alleged breach.

Causation

37    Plainly evidence going to causation will be admissible.

Equitable Compensation

38    Generally it would appear that evidence going to equitable compensation will be admissible and is apparently likely to fall within the same compass as evidence going to the plaintiffs damages case

Procurement of breach of contract/participation in breach of fiduciary duties

39    By reason of the subjective element raised by these causes of action, evidence of the motivation of those persons against whom such claims are made, in taking or omitting to take particular steps , would appear to be relevant in determining in relation to the tort of procuring a breach of contract, whether the relevant knowledge or intention is made out and in relation to the claimed participation in breach of fiduciary duty, whether the requisite subjective element in the sense referred to in the authorities is made out. 40    If the pleadings against the individual defendants was clear in respect of a succinct statement of the elements said to amount to a procurement of breach of contract one would expect to find:

(a) an allegation of the contractual term, the breach of which is said to have been procured

(b) an allegation of knowledge of that contractual term or of reckless indifference

(c) an identification of the conduct said to amount to the breach of the term

(d) a precise identification of the conduct of the individual defendants which is said to have amounted to the procurement of the relevant breach.

(e) an allegation of causation of damage caused by the procurement of breach

(f) an allegation of the damages suffered by the procurement of breach of contract

41    In the same way, if the pleadings against the individual defendants was clear in respect of a succinct statement of the elements said to amount to a participation in relevant breaches of fiduciary obligation, one would expect to find:

(a) an allegation of the precise fiduciary obligation, the breach of which is said to have been participated in

(b) an allegation of the requisite subjective element in relation to the breach of fiduciary obligation said to have been participated in

(c) an identification of the conduct said to have amounted to the primary breach of fiduciary obligation

(d) a precise identification of the conduct of the individual defendants which is said to have amounted to participation in the primary breach of fiduciary obligation

(e) an allegation of causation of loss or damage caused by the participation in breach of fiduciary obligation

(f) an allegation of the damages suffered by such participation in breach of fiduciary obligation.

42    The difficulty at this stage in the proceedings is the imprecision of the pleadings insofar as the individual defendants are concerned. In some respects the pleadings are sufficiently precise but in a number of respects the pleadings leave a deal to be desired. The Court has been informed that the plaintiffs intend to attend to certain of these difficulties in their address in reply.

43    As I have said it is necessary for the court to approach the case management exercise in dealing with thousands of pages of statements in a practicable fashion. If each paragraph of each statement is to be a candidate for objection, or even if every fourth or fifth such paragraph was to be a candidate for objection, it would take the court literally months in which to adjudicate upon the objections. This seems to me to be the epitome of inefficiency. As I have said it seems to me that there must be a way of proceeding which albeit somewhat rough and ready may still be seen to protect each party against unfair prejudice and will permit the regular continuance of the proceedings avoiding a lengthy delay for the purpose of dealing with the enumerable objections.

Dealing with admissibility questions as they relate to the separate positions of relevant defendants

44    The initial objections by the defendants to the statement of Mr Maconochie are very expansive and very detailed. These objections are divided into a number of columns, the first of which are objections against admissibility as against NAB , the second of which are objections against admissibility as against NMG /Ausmaq System, the third of which are objections against admissibility as against NAFM , the fourth of which are objections against admissibility as against Messrs Barnes, Cicutto, Krasnostein and Argus, and the fifth of which are objections against admissibility as against Messrs McKimm and Courtney.

45    The simple fact is that by reason of the number and length of statements to be read by the plaintiffs in the proceedings and by reason of the amount of material, including exhibits to those statements, which is to be sought to be tendered in the plaintiffs case, the Court as a matter of practicability is not able to exhaustively treat at this stage of the proceedings with the separate position of each of the defendants when admissibility objections are taken. This point appears to have been accepted at least in relation to corporate defendants, by Mr Bathurst QC at transcript page 3421 where he submitted that the defendants would not expect the court to make those decisions necessarily at this stage.

Admissibility against corporate Defendants

46    To my mind having inspected by now a number of the objections to certain of the statements of Mr Maconochie, it seems clear that by and large the admissibility questions raised by the corporate defendants referred to in the first three columns of the defendants objection list can generally be dealt with together. I propose to treat evidence tendered against any of the corporate defendants as admitted as against all corporate defendants. However if the defendants maintain that particular items of evidence are not admissible against any particular corporate defendants and so indicate at the time of final address, I will reconsider the admissibility of that item of evidence as against those particular corporate defendants.

Admissibility against individual Defendants

47    The position with respect to the individual defendants raises special difficulties of case management If one carefully analyses the different formal positions occupied by the individual defendants the point is made. Mr Barnes for example is said at all material times to have been an officer and employee of NAB, since 11 December 1997 to have been a director of NAFM and until 29 April 1998 to have been a director of and chairman of directors of NMG and of NMG's subsidiaries. The other individual defendants were apparently from time to time and at different times, directors of one or other of the relevant defendants. Allegations as to their specific involvement are not consistent as between the pleadings and the particulars. At one level the plaintiffs assert that the individual defendants or some of them knew and became aware of particular matters at and from or shortly after they became directors of named companies.

48    As a matter of case management the notion that the court must at this stage in the proceedings separately, in relation to the numerous paragraphs of the statements of Mr Maconochie which are objected to, identify precisely how the evidence sought to be adduced in each such paragraph may or may not be admissible against each of the six individual defendants, and for what reason and related to what particular position which was occupied by that defendant, is to my mind misconceived. This is not however to say that at the end of the day these paragraphs are all necessarily to be admitted against each of the individual defendants or taken to prove that those defendants had knowledge of particular events or knew or believed that their actions involved inducing corporate defendants to breach contract or that they were recklessly indifferent in that regard or that they were party to particular strategy or course of conduct by way of participating in breaches of fiduciary obligation. Here again to my mind the common sense approach and arguably the only practicable approach to dealing with admissibility matters presently is to reserve on the question of admissibility of this material until at an appropriate point in the case, particular admissibility questions can be further argued. This may well occur in final address. It may occur prior to final address. My preference would be for the rulings to be given when the witness assumes the witness box because on this date both sets of counsel are focussed on the significance of the particular witnesses proposed evidence and the cross examiner may be expected to be in a position to withdraw a number of objections and to be in a position to point to the substantive objections which are to be pressed and require immediate rulings. The fact that each of the individual defendants has now filed and served a detailed statement setting out that person's involvement and knowledge of material matters simply means that, as a matter of reality, the plaintiffs have the means of proving certain parts of their case by tendering parts of those statements as necessary. And where the vital questions of the plaintiffs making good as part of their case, the knowledge of facts or states of mind of individual defendants or motivation of and intent of individual defendants, come to be dealt with, it will clearly be necessary for the plaintiffs during the proceedings to prove those matters on admissible grounds as against the individual defendants.

49    In the result to my mind it is not presently possible as a matter of case management, to treat with the objections to admissibility which are advanced by the individual groups of defendants and I intend to reserve on those matters for the time being. The point is that the defendants have not, as it seems to me, taken care to identify presently and in the first batch of objections to paragraphs in the statements of Mr Maconochie, matters of special significance to the individual defendants in their cases. Blanket objections are taken in the name of the individual defendants to an enormous amount of non objectionable material. Hence an enormous amount of waste of time would it seems to me be involved in the court presently, even if it were practicable to do so, (which in my view it is not), adjudicating upon all of these types of objections.

The Way Forward

50    With the above overview in mind it is then necessary to lay down a practicable way forward. Having already outlined the approach to be taken

(a) to evidence going arguably to contractual construction and

(b) with respect to corporate and individual defendants,

I turn to treat with four discrete areas which tend to recur, namely objections to the expertise of particular witnesses, evidence of conversations, documentary evidence and evidence of the subjective state of mind or opinions of witnesses.

Challenges to the expertise of particular witnesses

51    I intend to follow the approach taken by McLelland CJ in Eq., in Trust Company of Australia Ltd v Perpetual Trustees WA Ltd Supreme Court of New South Wales [Supreme Court of New South Wales unreported 18 Sep 1996], which was as follows: · To first examine the training, study or experience of the witness ; · To next examine whether the witness has been shown to have specialised knowledge based upon that training, study or experience · To then outline the extent to which the witness has been shown to be entitled to express opinions based wholly or substantially on the specialised knowledge which has in turn been shown to have been based on his or her training, study or experience.

Hence His Honour said: "I consider that [the witness], has been shown to have specialised knowledge based on his training and experience... which qualifies him to express opinions on matters of the following descriptions which do appear in his report [and his Honour then set out the particular areas in respect of which the expert evidence was to be admitted].

52    In so far as any particular witness may have expressed opinions in any report :

(a) on matters going beyond those descriptions those opinions not having satisfied the criteria set out in section 79 of the Act, will not be admitted into evidence.
(b) which are arguably borderline in terms of whether or not they are opinions on matters going beyond those descriptions, I intend to determine whether it is appropriate to refuse to admit them in the exercise of the court's power under section 135 or 136 of the Act, assuming for the purposes of that exercise, that they are opinions which do not go beyond those descriptions.

53    As a general matter the court remains entitled:

(a) even if ruling that a witness has expressed opinions on matters which fall within the descriptions and has therefore satisfied the criteria set out in section 79, utilise its powers under section 135 or 136 of the Act to refuse to admit the evidence
(b) even if ruling that a witness has expressed opinions on matters going beyond those descriptions, those opinions not having satisfied the section 79 criteria, to hold that should such ruling be incorrect, the court would have utilised its powers under section 135 or 136 of the Act to refuse to admit the evidence

54    I note in this regard that in H G v The Queen (1999) HCA 2, Gleeson CJ said:

'By directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or experience, the section requires that the opinion is presented in a form which makes it possible to answer that question.' [at para 39] [citing the approach by McLelland CJ in Eq. taken in Trust Company of Australia Ltd]

55    Gleeson CJ pointed out that in trials before judges alone, as well as in trials by jury, it is important that the opinions of expert witnesses be confined, in accordance with section 79, to opinions which are wholly or substantially based on their specialised knowledge. As his Honour said at paragraph 44:

'Experts who venture "opinions", (sometimes merely their own inference of fact), outside their field of specialised knowledge, may invest those opinions with a spurious appearance of authority, and legitimate processes of fact finding may be subverted.']

56 In so far as any particular witness may have expressed opinions in any report on matters going beyond those descriptions, I intend to determine whether it is appropriate to refuse to admit them in the exercise of the court's power under section 135 or 136 of the Act, assuming, without deciding, that they would be admissible under section 79 of the Evidence Act. 57 Subject to the above considerations which are intended to protect both parties from any unfairness in relation to a blanket approach taken to admissibility, it seems to me that the following may be the most convenient and practicable approach to conversations, documents and statements of the subjective state of mind or opinions of witnesses.

Conversations

(a) Every conversation should be admitted firstly as evidence that the conversation in fact took place between those persons who were parties to the conversation. Admissibility on this basis is at the very least , relevant to the subjective state of mind of the parties to the conversation. But also the very fact that the conversation is said to have occurred may have a relevance to identifiable issues. Take for example the importance of being able to date documents or other conversations or events. Clearly the fact that a particular conversation is said to have occurred on a particular date may well bear upon the question of the date of particular documents or of other conversations or events.

(b) A convenient abbreviated ruling may be:

Conv = Allowed only as proving conversation. Section 136 limiting order made
(c) In some circumstances the admission into evidence of conversations will go further and will constitute evidence of the truth of the matters stated in the conversations admissible against a party. This will occur where one or more of the parties to the conversations was in a position to make admissions on behalf of a party to the proceedings. This is the type of matter which can be the subject, as and when appropriate, of particular address.

Documents

(d) The whole of the set of materials sought to be tendered by the plaintiffs and the defendants can be admitted into evidence as exhibit PX subject to objection. This will ensure that both parties are entitled at such times as they deem appropriate to object to the admissibility of any such documents or to endeavour to treat with the specific basis on which statements in the documents are to be regarded as tendered/admitted to prove. Many documents in a case such as the present will be admissible as business records but the parties will have leave where appropriate to address the question of whether or not particular documents fall within that category.

(e) Convenient abbreviated rulings may be:

Doc = Reference to document not regarded as proving document but only as convenient cross reference to document when and if document admitted.
Doc Constr = Reference to construction only admitted as evidence of statement makers opinion reached at the material time (ie either contemporaneously or at the time when the Statement is made) and S136 Limiting Order made.

58    When and if questions arise as to the authenticity of particular documents it seems to me that they can also be dealt with on an instant specific basis.

Subjective states of mind/opinions

59    The witness statements include numerous references to the beliefs or opinions of the witnesses covering many subjects - often expressed as contemporaneous with the events in question, but sometimes expressed as at the time of making of the witness statement. Outside of questions of expertise (which require a separate decision making context) and subject to rulings on relevance as may be required differentiating between opinions as at the date of making of the statements which are irrelevant as being simply submissions and relevant statements of opinion, the convenient abbreviated rulings may be:

Subj = Allowed as relevant to subjective state of mind of witness
Op = Only allowed as evidence of opinion of statement maker held either contemporaneously or held as at the date of making of the witness statement. S136 Limiting Order made.

I certify that paragraphs 1 - 59
are a true copy of the
directions herein of the
Hon. Justice Einstein
given on 4 December 2000

___________________
Susan Piggott
Associate

4 December 2000

Last Modified: 06/13/2002