Idoport Pty Ltd v National Australia Bank Ltd

[2000] NSWSC 1077

Reported Decision: 50 NSWLR 641

New South Wales

Supreme Court

CITATION:	IDOPORT PTY LTD & ORS v NATIONAL AUSTRALIA BANK LTD & 8 ORS; IDOPORT PTY LTD "JMG" & MARKET HOLDINGS PTY LTD v DONALD ROBERT ARGUS; IDOPORT PTY LTD "JMG" v NATIONAL AUSTRALIA BANK LTD [12] [2000] NSWSC 1077 revised - 24/11/2000
FILE NUMBER(S):	SC 50113/98; 50026/99; 3991/00
HEARING DATE(S):	14/11/00, 15/11/00, 16/11/00, 20/11/00
JUDGMENT DATE:	23 November 2000
PARTIES :	Idoport Pty Limited (Plaintiff) Market Holdings Pty Ltd (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	JJ Garnsey QC, RC Titterton (Plaintiffs) JR Sackar QC, JA Halley (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiffs) Freehill Hollingdale & Page (Defendants)
CATCHWORDS:	Evidence - Evidence Act 1995 - Is the Evidence Act a code - Expert opinion evidence - Ultimate Issue Rule - s80 of the Evidence Act - Expert opinion evidence as to foreign law - Proper scope for expert opinion evidence as to foreign law - Rule that expert opinion evidence not to usurp the essential function of the court - evidence allowed.
LEGISLATION CITED:	Evidence Act 1995 Interpretation Act 1987 Native Title Act 1993
CASES CITED:	Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 Ancher, Mortlock, Murray & Wooley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] AC 853 Clark v Ryan (1960) 103 CLR 486 Daniels v State of Western Australia [2000] FCA 858 (unreported, Federal Court of Australia, 21 of September) Grey v Australian Motorists General Insurance Co Pty Ltd [1976] 1 NSWLR 669 James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554 Joseph Crosfield & Sons Ltd v Techno Chemical Laboratories 29 TLR 378 Lowery v R [1974] AC 85 Murphy v The Queen (1989) 167 CLR 94 National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209 Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 O’Brien v Gillespie (1997) 41 NSWLR 549 Parkasho v Singh [1968] P 233 Papakosmas v The Queen (1999) 196 CLR 297 Pepsi Seven Up Bottlers Perth Pty Ltd v Commissioner of Taxation (1995) 62 FCR 289 Quick v Stoland Pty Limited (1998) 87 FCR 371 R v Holmes [1953] 2 All ER 324 R v Palmer [1981] 1 NSWLR 209 Rogers v Whitaker (1992) 175 CLR 479 RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 34 NSWLR 129 Symonds v Egan National Valuers (NSW) Pty Ltd (No 15) (unreported Supreme Court of NSW 22 February 1996) Telstra Corporation v Australis Media Holdings Pty Ltd (No 2) (1997) 41 NSWLR 346 Transport Publishing Co Pty Ltd v The Literature Board of Review (1956) 99 CLR 111 ULV Pty Ltd v Scott (1990) 19 NSWLR 190 United States Surgical Corporation v Hospital Products International Pty Ltd [1982] NSWLR 766. United States Surgical Corporation v Hospital Products International Pty Ltd (unreported, Supreme Court of New South Wales, 19th April 1982) United States Trust Co of New York v Australia and New Zealand Banking Group Ltd (1995) 37 NSWLR 131 147 Walton v Corporate Venture Pty Ltd (unreported, ACT Supreme Court, 6 June 1996) Westpac Corporation Ltd v Jury (unreported, Supreme Court of NSW 17 October 1995)
DECISION:	Parties to revisit objections in the light of this judgment.

INDEX

Page Paragraph
The Issues 1 1

Context for Rulings 2 2

Principles Governing the Ascertainment and Application of
Foreign Law 2 5

Principles prior to the enactment of the Evidence Act 2 5

Relevant provisions of the Evidence Act 4 9

Plaintiffs’ submissions 5 12

Defendants’ submissions 8 15

Plaintiffs’ submissions in reply 12 23

Scope of the evidence admissible as to foreign law 12 24

Is the Evidence Act a Code? 13 25

Section 80 of the Evidence Act 15 31
What is the ‘Ultimate Issue Rule’? 15 33

Effect of s80 on the principles regarding
admission of evidence of foreign law 19 43

Conclusion 23 49

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

EINSTEIN J

23 November 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 LTD “JMG” v NATIONAL AUSTRALIA BANK LIMITED

JUDGMENT - Issues relating to foreign law principles

The Proceedings

1 In these three related sets of proceedings the plaintiffs’ claim from the defendants damages in the order of $50 billion. Speaking very generally, the action consists of claims by the plaintiffs for damages in connection with the alleged failure of the defendants to properly commercialise what has sometimes been described as an Automated Market Quotation System called ‘AUSMAQ.’ Whether that description is apt is to be litigated. This alleged failure is said by the plaintiffs to sound in damages for, inter alia, breach of contract, breach of fiduciary duty, contravention of s52 of the Trade Practices Act and s42 of the Fair Trading Act, the tort of procuring breach of contract, knowing involvement in breach of fiduciary duty and accessory liability for contravention of the Trade Practices Act under s75B of the Act. In part, those damages are claimed in respect of what are alleged to have been commercial opportunities to exploit the AUSMAQ System in various parts of the world, including the United Kingdom, the United States, Japan and Taiwan, which opportunities are said to have been lost as a result of the alleged malfeasance of the defendants. The foreign law issue arises because the defendants seek to lead evidence from experts to show that for various foreign law or foreign regulatory reasons, those commercial opportunities for the worldwide exploitation of the AUSMAQ System either did not exist or were not opportunities of the nature or extent posited by the plaintiffs’ claim.

Context for Rulings

2    A number of questions have been raised for determination in relation to an amended notice of motion filed by the plaintiffs on 16 November 2000. That motion is part heard and as a matter of convenience is being heard together with two notices of motion filed by the defendants on 21 November 2000. 3    One of the issues raised by the subject motions concerns objections taken by the plaintiffs to statements sought to be relied upon by the defendants on the basis that the statement or parts of them are said not to provide admissible expert evidence insofar as they do not merely give evidence of foreign law or regulatory practice as a fact ("content evidence") but are said also to express opinions as to the application of the foreign law to the facts ("application evidence".) 4    The plaintiffs have indicated that a decision in relation to this question of principle is urgent in terms of the regular continuance of the proceedings which, if the plaintiffs submissions be rejected, will (subject to the court's decision on those aspects of the motions which have not yet been argued), lead to the plaintiffs requiring to obtain evidence to answer these statements. In those circumstances the court has invited and received detailed written and oral submissions from both parties on the foreign law aspect of the matter. Notwithstanding that the motions are otherwise part heard the court is now in a position to deliver a judgment on the questions of principle. This judgment does not treat with any of the other issues which remain live on the part heard motions which issues will be the subject of adjudication once the remaining outstanding matters in relation to those motions have been completed. These essentially involve any evidence the plaintiffs wish to adduce in answer to the defendants motions and completion of address on outstanding issues.

Principles Governing the Ascertainment and Application of Foreign Law

(1) Principles Prior to the enactment of the Evidence Act

5    Prior to the Evidence Act 1995 the law governing the reception of evidence of foreign law and the application of that foreign law to the facts of the case was not in doubt. The existence of and content of foreign law was a question of fact. The Court was not at liberty to take judicial notice of the existence of and content of foreign law but, if it was to act on the basis of foreign law, it was required to act on the evidence of persons properly qualified to give evidence of foreign law: Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] AC 853 at 923 per Lord Reid. However, evidence was not receivable upon the question of how the foreign law so ascertained was to be applied to the facts of the instant case and what result would thereby be produced: United States Surgical Corporation v Hospital Products International Pty Ltd (unreported, Supreme Court of New South Wales, 19th April 1982, per McLelland J), United States Trust Co of New York v Australia and New Zealand Banking Group Ltd (1995) 37 NSWLR 131 at 147 per Sheller JA (with whom Mahoney and Meagher JJA agreed). Where the foreign law concerns the exercise of a discretion of either courts, regulators or administrators, evidence of the principles governing the discretion and the manner in which the discretion is exercised in the ordinary case or in any particular type of case was receivable: National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209 at 226 per Gummow J. From the above principles, it would follow that evidence of how a discretion would in fact be exercised in the instant case would not be admissible. 6 It has been said that the question of foreign law is ‘a question of fact of a peculiar kind:’ Parkasho v Singh [1968] P 233 at 250 per Cairns J. At least one peculiarity is the disparate circumstances in which a question as to foreign law can arise. There are at least three such circumstances. The first concerns the direct application of foreign law by a domestic court. Thus, if a contract is expressed to be governed by the law of a foreign country or the law of that foreign country is the appropriate law to govern a contract, in an action properly brought in a domestic court, that court will apply that foreign law to determine the rights and obligations created under the contract. An example of this type of case is United States Surgical Corporation v Hospital Products International Pty Ltd [1982] NSWLR 766. 7 The second type of case concerns the application of foreign law, not to determine the rights and obligations of the parties under foreign law, but in order to determine a question relevant to the ascertainment of the rights and obligations of the parties under domestic law. In such a case foreign law might be relevant to the ascertainment of the existence of and the degree of the loss of a chance to develop and market some product in a foreign country, the loss having been caused by the breach of a contract which is governed by domestic law. It is conceivable that in this type of case evidence which showed that the existence of and degree of the chance was, in fact, determined by matters extraneous to the applicable foreign law, would be relevant. This possibility serves to emphasise the essentially factual nature of the inquiry as to the existence of and content of foreign law in this category of case. 8 The third type of case, which may be considered intermediate between the first two, is where it is necessary to determine, for the purposes of the rules of private international law, the content and effect of foreign law so as to determine whether a domestic cause of action exists: James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554. A related type of case, which may be placed in the same category, is where it is necessary to determine the content and effect of foreign law so as to determine whether a foreign or domestic proceeding should be permitted to continue: see eg., National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 299 at 232 - 233 per Gummow J.

(2) Relevant Provisions of the Evidence Act

9    The principles which govern foreign law must now be considered in the light of and reconciled with the provisions of the Evidence Act 1995. Section 55(1) of that Act provides that

‘The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.’

10 Section 80 of the Evidence Act provides that

‘Evidence of an opinion is not inadmissible only because it is about
(a) a fact in issue or an ultimate issue; or
(b) a matter of common knowledge’

11    The Evidence Act only deals with evidence as to foreign law expressly in ss174 - 176. Section 174 provides a method of proving a foreign statute, proclamation, treaty or act of state. Section 175 provides a method of proving the contents of the ‘unwritten law’ or ‘common law’ Section 176 reads:

‘If, in a proceeding in which there is a jury, it is necessary to ascertain the law of another country which is applicable to the facts of the case, any question as to the effect of the evidence adduced with respect to that law is to be decided by the judge alone.’

(3) Plaintiffs’ Submissions

12    The plaintiffs submitted that the principles adverted to above had not been altered by the Evidence Act and that expert evidence of the application of foreign law was not properly admissible. They relied on the decision of Lindgren J in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 where his Honour considered the admissibility of a paragraph 24 in the statement of a Mr Altman in which the witness, in effect, expressed the opinion that a certain prospectus would be misleading under United States law and the directors of the relevant company accordingly liable. His Honour concluded that the Evidence Act did not affect the common law rules for the admission of evidence as to foreign law and that the evidence of Mr Altman was not admissible because it amounted to an application of foreign law. His Honour said that:

“If the position were left to the general law, Mr Altman would be entitled to identify and expound the United States law relevant to the circumstances of the present case as he assumes them to be ... But it would be a matter for this Court to decide how that law applies to the facts of the case, not for Mr Altman to express an opinion on the question as, in my view, he has done in par 24.”
[at 82]

13 His Honour then considered s80 and s55 of the Evidence Act and noted the argument that s80(a) had removed the basis on which the evidence of Mr Altman would have been inadmissible at common law. Lindgren J continued:

‘In my view par 24 is not admissible. It is not admissible for reasons which are not encompassed within the ‘reason’ referred to in par 80(a), namely being ‘about….an ultimate issue.’ In my view, those words are not apt to refer to expert legal opinion which impinges upon the essential curial function of applying law, whether domestic or foreign, to facts. I confess to finding it most difficult to accept that the Australian Law Reform Commission or the legislature intended by the modest terms of s80 to make admissible in all cases before the courts the opinions of those trained, studied or experienced in the law as to how the curial function is properly to be performed.
I find it convenient at the outset to state some principles of the general law against which, in my view, the effect of par 80(a) is to be determined. It is fundamental that the ascertainment of the law relevant to a matter before a court and its proper application to the facts of the particular case are of the essence of the judicial function and duty. Although those processes are properly the subject of submission, evidence of opinion, whether as to the identification of the relevant law or its proper application, is not admissible. The rationale underlying this fundamental principle may be expressed in various closely related ways: to admit such evidence would be to permit abdication of the judicial duty and usurpation of the judicial function; such evidence cannot be allowed to be probative or to rise higher than a submission; such evidence is necessarily irrelevant. [emphasis supplied]

In the case of foreign law, the only variation required to the foregoing statements is that foreign law is proved in the way in which facts are proved (this is what is meant by statements that foreign law is proved ‘as fact’), whereas the court is presumed to know the public laws of the State. But foreign law remains to be applied by the Court. It has been said that where there is a jury the only sound view, either on principle or policy, is that it should be proved to the judge, who is decidedly the more appropriate person to determine it: JH Chadbourn (ed) Wigmore on Evidence (1981) Vol 9, p687, par 2558 and authorities there cited. Accordingly, evidence of opinion as to the proper application of foreign law to fact is not admissible.

It would take clearer language than that of par 80(a) to displace the fundamental principle to which I have referred. The origin of par 80(a) can be traced back to the Law Reform Commission’s Interim Report on Evidence (ALRC 26, 1985) and its Final Report on Evidence (ALRC 38, 1987). I do not find it necessary to set out in detail what the Commission had to say about ‘the ultimate issue rule’ or its abolition. Paragraph 743 (pp411 - 415) of ALRC 26, Vol 1 sets out the background. Apart from an oblique reference to ‘the unlikelihood of experts in law being called’ (p414) the paragraph does not refer to expert opinion on domestic law or the application of foreign law and in my view the Commission did not have that subject in contemplation as an object of its recommended reforms. Rather, the paragraph was not addressing non-legal opinion evidence, whether by a non-legal witness or a non-expert witness which stumbles into the forbidden area of applying what could be regarded as a legal standard as to facts: cf R v Palmer [1981] 1 NSWLR 209 at 214G; RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 34 NSWLR 129 at 130F - 131G.

In the Bill which accompanied ALRC 26 the form of a provision recommended was as follows:

69. Evidence of an opinion is not inadmissible by reason only that it is about a fact in issue.’

In the Final Report, apart from suggesting an inclusion of a reference to ‘common knowledge’, the Commission did not deal with the question covered by cl 69 (ALRC 38 Ch 11, para 148 - 151). The form of cl 69 finally recommended by the Commission was as follows

69. Evidence of an opinion is not inadmissible by reason only that it is about -
(a) a fact in issue; or
(b) a matter of common knowledge.’

The words ‘or an ultimate issue’ were inserted following the words ‘a fact in issue’ in par (a) in the Evidence Bill 1991 (Cth). But the intention seems to have been to do no more than to give effect to the recommendation of the Commission discussed above - something which it was apparently thought might not be achieved by the mere reference to ‘a fact in issue.’

The significance of s80 has been referred to in two cases. In Westpac Corporation Ltd v Jury (unreported, Supreme Court of NSW, 17 October 1995) Rolfe J also did not construe the section as referring to the ultimate legal issue for determination by the Court. In Pepsi Seven Up Bottlers Perth Pty Ltd v Commissioner of Taxation (1995) 62 FCR 289 Hill J also considered s80 but in a respect presently not relevant.

Paragraph 80(a) does not dissuade me from concluding that Mr Altman’s application evidence in par 24 of his statement is not admissible for the same reason that content evidence and application evidence in relation to domestic law is not admissible.

There are various ways of expressing support for the conclusion which I have reached. First, the use of par 80(a) of the words ‘only’ or ‘about’ signify that the provision leaves untouched the fundamental common law principle which excludes expert legal opinion evidence as intruding upon the essential judicial function and duty to which I referred earlier. Secondly, the expression ‘an ultimate issue’ does not catch ‘the ultimate lega l issue’ for decision by a court. Thirdly, no issue arises under s80 because s55 is not satisfied since the evidence tendered is not evidence which could rationally affect the assessment of the probability of a fact in issue. Fourthly, reference to the legislative background shows that the reference in par 80(a) to the ‘ultimate issue’ was intended to refer to opinion by non-legal expert witnesses or non-expert witnesses on an ultimate issue of fact expressed in language which applies a legal standard.’ [emphasis supplied]

14    The plaintiffs also relied on the decision of Levine J in O’Brien v Gillespie (1997) 41 NSWLR 549 where his Honour followed the decision of Lindgren J in Allstate. That case concerned the evidence of a certain solicitor as to what, in certain assumed circumstances, a competent and prudent solicitor would have done. Levine J came to the view that the evidence was not properly within s79 of the Evidence Act and, alternatively, that ‘[i]f I be incorrect in coming to the view that the requirements of s79 have not been satisfied, I would exclude the proposed evidence under s80…. I am of the view that the proposed evidence goes to issues in this litigation which, on my construction of the section, fall within the ‘ultimate issues’ to an extent beyond any such exceptions to the exclusion of such testimony to which the section seems to point.’ (at 551) His Honour reviewed certain cases before and after the enactment of the Evidence Act and stated (at 557) that

‘I can come to the view that s 80 does not and cannot represent a complete codification of the law of evidence to the exclusion of the development of a body of principles referred to in the cases decided prior to its enactment. Secondly, I respectfully adopt the analysis and approach to the section of Lindgren J in Allstate and the conclusion to which he arrives. The view to which I ultimately come is that the proposed testimony of this witness is on the essential matters of fact and law to be decided by the application of legal standards upon the evidence of the actual transactions which the court will hear and thus does not more than intrude upon the exercise of the essential judicial function. ‘

(4) Defendant’s Submissions

15 The defendants make two alternative submissions which it will be convenient to deal with in the reverse order to which Mr Sackar QC for the defendants made them. In the first place, the defendants say that the Evidence Act represents a complete codification of the law in respect of the admissibility of evidence and that it was the clear intention of the legislature to abolish by means of s80 of the Evidence Act, the rule which prevents a Court from receiving evidence as to the application of foreign law and that if this intention is not manifest on the words of the section it is made clear by the discussion in the Australian Law Reform Commission’s Interim Report, No 26. In this respect, the defendants submitted that the decision of Lindgren J in Allstate was wrongly decided. 16    In the second, place, the defendants submitted that even assuming the correctness of the decision of Lindgren J in Allstate, the evidence they sought to lead was within the proper scope for the reception of foreign law expert evidence. 17 Upon this first argument, the defendants began by submitting that what is known as the ‘ultimate issue rule’ and the rule which prevents the reception of evidence of the application of foreign law were, in fact, one and the same. Both were concerned with preventing a witness from usurping the essential curial function. On the defendant’s submission, the clear effect of s80, considered in the context of the scheme of the Act, is that if evidence is relevant under s55 and not otherwise made inadmissible by other parts of the Act, it is not inadmissible only because it is about a fact in issue or an ultimate issue and is thus admissible subject to the discretions granted to the court under s135. 18    The defendants stressed that the relevance of the material objected to by the plaintiffs was not disputed and in particular, placed reliance on the use of the word ‘indirectly’ in s55. In the instant case, the defendants submitted that the evidence as to the ultimate issue was indirectly relevant because it would assist the Court to assess the existence of a fact in issue; namely, whether there was an opportunity for the exploitation of Ausmaq in the relevant jurisdiction and the extent of that opportunity, measured in percentage terms. 19    The defendants submitted that Lindgren J in Allstate overstated the position when his Honour said (at 83). ‘I confess to finding it difficult to accept that the Australian Law Reform Commission or the legislature intended, by the modest terms of s80, to make admissible in all cases before the courts the opinions of those trained, studied or experienced in the law as to how the curial function is properly to be performed.’ On the defendant’s submission, the most s80 could possibly be construed to do was to remove the fetter to admissibility caused by the ‘ultimate issue rule’ to evidence which was

(a) otherwise admissible and
(b) not appropriate to be excluded by means of the discretions contained in s135.

20 The defendants then relied on certain passages in the Australian Law Reform Commission Interim Report (No 26) which, on their submission, clearly evinced an explicit intention, manifested in s80, to abolish the ultimate evidence rule. The defendants submitted that it was open to the Court to use these materials for the purpose of statutory construction either by dint of s34 of the Interpretation Act 1987 or because of the general common law position as explained by McHugh J in Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112. Given the submissions of the defendant it is appropriate to set out at length the relevant passages of the ALRC Report No 26 at p412 - 415:

‘It is conventionally said that testimony may not be given upon the ultimate issue or possibly upon ultimate issues generally. Quite what constitute ultimate issues, however, has not as yet been authoritatively ruled upon. Despite this the courts have continued to try to apply the ultimate issue rule. It has been suggested that the true analysis of the rule is that it prohibits a witness applying any kind of ‘legal standard’ to the facts, something which it is suggested is the function of the jury after instruction from the judge. The major criticisms that may be levelled against the traditional formulation of the rule are - uncertainty as to its present formulation; the arbitrariness of its implementation and its conceptual nonsensicality.
The popular justification for the rule, that it prevented the expert or lay witness from usurping the function of the jury is misconceived. There is no usurpation. The jury, in any event, will be told that they must assess the evidence, lay and expert. It is upon the most important issues that expert assistance can be crucial and the courts need to be able to receive it. It is necessary to give both sides, be the proceedings criminal or civil, full opportunities to call witnesses to give relevant evidence. It is proposed, as by the United States Federal Rules of Evidence and recommendations of the Law Reform Commission in Canada, Scotland and South Australia that the ultimate issue rule be abolished.
This change should not significantly increase the volume of testimony received by the courts because it has become common practice de facto to allow evidence to be given upon ultimate issues. It will however, serve to make the law more coherent and to remove a rule which has the potential to, and now and again does, cause unnecessary confusion and hardship.’

21    The Commission then considered whether any restriction should be imposed. It considered that there was much force to the comment that no restrictions were necessary as a person not expert in the law could not testify as to the effect in law of a state of affairs and in practice an expert would not generally be called. The Commission also commented that an expert on a question involving legal standards and questions is controlled by the need to have special qualifications likely to assist the court and is subject to the exclusionary discretions. The Commission then considered law reform proposals in Canada and South Australia and continued.

‘The Commission has considered other formulae. All are unsatisfactory:

(a) ‘Evidence of an opinion as to the effect in law other than foreign law of a state of affairs is not admissible in a trial. This proposal would prevent opinion testimony on the effect of Aboriginal customary law (eg., where recognised or where relevant on matters such as sentencing) and on the effect of international law (which is not regarded as foreign law).

(b) Evidence of an opinion as to the application of the law to a state of affairs is not admissible in a trial. It would be necessary to require the opinion to be of the result of the application of the law. There are difficulties about the meaning of ‘the law.’ Such a proposal could exclude evidence presently admissible - for example, whether the accused knew the nature and quality of his act and whether it was wrong; whether a representation in an application for insurance was material; what is proper seamanship in a marine case and whether the acts of a professional person were negligent.

(c) Evidence of opinion as to the application of a legal standard is not admissible. This test reflects the early approach that proscribed expert opinion upon a question of mixed law and fact. It could also exclude the evidence referred to above that it presently admissible.

Having regard to

· the controls built into the other proposals on opinion evidence;

· the unlikelihood of experts in law being called;

· the ability of the relevance discretion to be used to exclude evidence the probative value of which is outweighed by its tendency to confuse, mislead etc, and

· the difficulties in producing a satisfactory test

no proposal is advanced for a control in substitution for that restricting testimony upon an ultimate issue. A specific provision is created, however, to abolish it, so as to make clear the stance of the draft legislation on the area and to preclude so far as possible the re-emergence of the rule via the relevance directions. This is the approach taken in the majority of law reform proposals. ’

22    The defendants further point out that the Law Reform Commission’s Final Report (ALRC No 38 at p82 - 84) noted that the Interim Report proposed that ‘[t]he common law rules excluding evidence of opinion about matters of common knowledge and about ultimate issues were to be abolished’ and otherwise recommended that ‘the interim proposals should be implemented. The defendants also relied on the Second Reading Speech for the Evidence Bill of the then Attorney General (Hon JW Shaw QC) who commented that ‘[t]he common law rules known as the ultimate issue rule and the common knowledge rule are abolished’ (Legislative Council Debates (Hansard), 24 May 1995, p116). The defendants say that these passages from the ALRC report show clearly that it was precisely the intention of the ALRC and the legislature by means of s80 to abolish the ultimate issue rule and to the extent that the decision of Lindgren J suggests otherwise it was wrongly decided and should not be followed.

(5) Plaintiff’s Submissions in Reply

23    In reply to these submissions, the plaintiffs asserted that the decision of Lindgren J in Allstate was correct and should be applied, that the extrinsic materials referred to by the defendants were not of assistance as they were ambiguous as to what they considered the ultimate issue rule to be, confused expert evidence with the curial function and merely proposed the abolition of the ultimate issue rule, whatever that might be and that the statement by Glass JA in R v Palmer [1981] 1 NSWLR 209 at 214 was still good law and should be applied to this case. I shall come to the statement of Glass JA in R v Palmer below.

(6) Scope of Evidence Admissible as to Foreign Law

The Issues

24 The issues for consideration raised by the various submissions of the parties may be specified as these. First, is the Evidence Act a self-contained code. Second, what is the meaning and effect of s80. Third, what is the effect of the proper construction of s80 upon the principles governing the admission of expert evidence as to the content of foreign law.

(i) Is the Evidence Act a Code?

25    The question of whether the Evidence Act constitutes a code so as to exclude principles of evidence extraneous to the Act was considered by Hill J in Pepsi Seven-Up Bottlers v Commissioner of Taxation (1995) 62 FCR 289 at 301 where his Honour was concerned with the question of whether evidence of the ordinary meaning of words contained in a statute was admissible. Hill J concluded that it was not and continued (at 301) ‘the Evidence Act does not represent a code of the law of evidence. Particularly, it would not preclude the admissibility of evidence of usage where the evidence was relevant to an issue in the case. But nor would it permit evidence of usage to be given if that evidence were precluded by the common law of evidence. Thus I do not see the conclusion to which I have come as in any way affected by the Evidence Act.’ A similar conclusion was reached by Dowd J in Symonds v Egan National Valuers (NSW) Pty Ltd (No 15) (22 February 1996, unreported) and by Levine J in O’Brien v Gillespie (supra). 26    To my mind, it is obviously correct to say that the Evidence Act is not a code in the sense that it contains a complete an exhaustive statement of the law of evidence. To say this is to do no more than to give effect to s9 which provides that ‘[t]his 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 fas as this Act provides otherwise expressly or by necessary intendment.’ The matter was adverted to by the Attorney General in his Second Reading Speech where he said that ‘[i]t should be noted that, whilst the bill codifies many aspects of the law of evidence, it is not intended to operate as an exhaustive code’ (Hansard, 24 May 1995, p114). 27    Nonetheless, to say that the Evidence Act is not a code is not to be used as a means to retain aspects of the common law of evidence which are inconsistent with the operation of the Act. Full effect must be given to the provisions of the Act. In particular full effect must be given to s56 which provides that

(1) Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding.

(2) Evidence that is not relevant in the proceeding is not admissible.

28    Section 56 has been referred to as the ‘pivotal provision’ of the Evidence Act: Telstra Corporation v Australis Media Holdings Pty Ltd (No 2) (1997) 41 NSWLR 346 at 349 per McLelland CJ in Eq. Its effect is far reaching. In the light of s56 it is not legitimate by reference to principles which are extraneous to Act, to exclude evidence which is relevant under the test provided for in s55, not otherwise made inadmissible by the provisions of the Act and not the proper subject of an exercise of the discretions contained in ss135 - 136. The effect of this conclusion is that the principles which governed the admission of evidence as to foreign law at common law must now accommodate themselves within the provisions of the Act and if they cannot be so accommodated, those principles are not to be applied because by dint of s9 they are of no effect (per contra Levine J in O’Brien v Gillespie). 29    To proceed in this way is, to my mind, entirely consistent with the approach of the High Court in Papakosmas v The Queen (1999) 196 CLR 297 where the Court was concerned with the admissibility of evidence of complaint by an alleged victim of sexual assault made shortly after the alleged assault. The Court considered and rejected an argument that the Evidence Act, in particular s55, s66 and the discretion contained in s135, should be interpreted in a manner consistent with the common law of evidence which permitted evidence of prior complaint but going only to the credibility of the complainant and not as proof of the fact asserted in the complaint. Gleeson CJ and Hayne J (at 302) said:

‘It is clear from the language of the Act and from its legislative history that it was intended to make and has made substantial changes to the law of evidence in New South Wales. Similar legislation has been enacted by the Parliament of the Commonwealth. Section 9 of the Act provides that it does not affect the operation of the common law except so fas as the Act provides otherwise expressly or by necessary intendment. Even so, the sections of the Act relevant to this case undoubtedly make express provision different from the common law. It is the language of the statute which now determines the manner in which evidence of the kind presently in question is to be treated . The appellant argues that the meaning and effect of the language, properly understood, is to be determined in the light of and in a manner that conforms to, the pre-existing common law. For reasons that will appear, that argument must be rejected.’
[Emphasis added]

30    The reasons of the Court for rejecting the appellant’s contention may be summarised by quoting Gaudron and Kirby JJ who said (at 312) that ‘[t]he Act specifies new rules of evidence in place of those developed by the common law’ and it was to that Act which one must now look to determine the admissibility of evidence and not the common law. To a similar effect, McHugh J (at 324) said ‘[t]he Act has made substantial changes to the law of evidence. Notwithstanding s9, reference to pre-existing common law concepts will often be unhelpful.’ This approach is also consistent with the views of Branson J in Quick v Stoland Pty Limited (1998) 87 FCR 371 at 373.

(ii) Section 80 of the Evidence Act

31    When the scheme of the Evidence Act is understood in the manner I have outlined, the effect of s80 is, to my mind, much clarified. Section 80 refers, relevantly, to a principle of the common law of evidence - the ‘ultimate issue rule’ - and provides that evidence of an opinion is not inadmissible only because of that rule. Thus, it makes clear that if the evidence is relevant and does not fall foul of any other exclusionary provision to be found in the Act (or, having come within an exclusionary provision, it comes within one of the exceptions to the exclusionary provision) it is not to be excluded because it is evidence ‘about’ - that is evidence which directly addresses the issue of - the ‘ultimate issue.’ 32 A further elucidation of the section requires consideration of the term ‘ultimate issue.’ From a reading of the legislation, the Second Reading Speech of the Attorney General and the ALRC Reports, it is clear that when s80 was enacted the legislature had in mind a pre-existing rule of the common law. Further, the language of s80 is quite general; no definition of what is an ‘ultimate issue’ is offered. It is therefore legitimate, as the learned editor of Cross on Evidence (2000, para 1765) points out, to have regard to the common law which pre-dated the Evidence Act.

What is the ‘Ultimate Issue Rule’?

33    What is the ‘ultimate issue rule?’ To this question, no easy answer offers itself. One helpful explanation was provided by Neville J in Joseph Crosfield & Sons Ltd v Techno Chemical Laboratories 29 TLR 378 at 379: ‘It is not competent in any action for witnesses to express their opinion upon any of the issues whether of law or fact which the Court or a jury has to determine.’ This was quoted with approval by Mr G.J. Samuels (as he then was) in a paper later published in HH Glass QC (ed) Seminars in Evidence (1970) at p151. The commentator, later Samuels JA of the New South Wales Court of Appeal, (at p152) gave three reasons for the justification of the rule: first, so as far as possible to prevent a plethora of competing opinions. Second, to prevent expert opinion from overbearing the jury’s duty to make up its own mind. Third, to exclude advocacy in the guise of expert opinion. Later the learned author formulated the rule as follows (at 153): ‘[a]n expert cannot be permitted to give expert opinion upon an ultimate issue, if its determination depends on the application of some legal standard.’ 34    In Transport Publishing Co Pty Ltd v The Literature Board of Review (1956) 99 CLR 111 at 127 Webb J adverts briefly to the principle as does Dixon CJ in Clark v Ryan (1960) 103 CLR 486 at 491. It received helpful exposition in R v Palmer [1981] 1 NSWLR 209 where Glass JA said (at 214):

‘The third ground argued was that the tender of such evidence violated a supposed rule that no opinion evidence, whether expert or non-expert may be directed to an ultimate issue for determination by the jury. I question that there is any such rule in the terms which have been submitted to us. It is a commonplace experience in trials, both civil and criminal, before juries for evidence of opinion to be received from both experts and non-experts in relation to ultimate issues for jury determination. I need only say, so far as expert evidence is concerned, that this happens all the time with respect to scientific, medical and handwriting evidence and so far as concerns non-expert opinion, that this, too, is receivable for the purpose of identification of proof of speed. The true rule, in my opinion, is that no evidence can be received upon any question, the answer to which involves the application of a legal standard . It is not possible, for example, to tender evidence that a defendant was negligent, that a deceased lacked testamentary capacity or that the accused was provoked. These are questions, the answers to which can only be given by the jury after the judge has instructed them upon a rule of law which they must apply.’ [emphasis added]

35    Earlier in Grey v Australian Motorists General Insurance Co Pty Ltd [1976] 1 NSWLR 669 at 675 - 676 Glass JA had offered another formulation, different in terms but no different in substance. But even understood in the limited fashion outlined by Glass JA, the cases disclose no consistent application. In R v Holmes [1953] 2 All ER 324 the English Court of Criminal Appeal allowed an expert witness to express a view as to whether a defendant knew the nature of his act and that it was wrong where the defendant pleaded insanity. In Lowery v R [1974] AC 85 it was held by the Privy Council that an expert could give an opinion as to which of two defendants was more likely to have committed a particular offence. No doubt, it was the inconsistency of the application of the ultimate issue rule which lead Mason CJ and Toohey J in Murphy v The Queen (1989) 167 CLR 94 at 110 to state that ‘[i]t is doubtful that there is now an absolute rule precluding an expert witness from expressing a view as to the ultimate issue.’ The matter was considered by Priestley JA (with whom Kirby P and Samuels JA agreed) in ULV Pty Ltd v Scott (1990) 19 NSWLR 190 where his Honour commented (at 202) that ‘[a]ll the persons who have written on the subject since 1960 have commented on the difficulty of stating any clear rule.’ His Honour then quoted (at 203) with approval from the Australian Law Reform Commission Research Paper No 13 entitled ‘Opinion Evidence’ where the Commission had commented as follows:

‘One of the few common things that can be asserted with confidence in relation to the ultimate legal issue rule is, therefore, that a witness be he expert or common, may not offer his opinion on any matter which involves his use of a ‘legal’ term. So too, though, may it be said that there is a substantial move away from the concept that evidence should never be given on any ultimate issue. In recognising the reality of the situation, however, the courts have continued to have problems in grappling with the theoretical problems that they have created for themselves in formulating the ultimate issue rule. This causes the situation to remain uncertain.’

36 Notwithstanding the uncertain nature of the rule, its core component concerns evidence of an expert as to the satisfaction or not of a standard which has legal effect. Thus, the rule would encompass evidence that a certain person had been, in the opinion of the witness, ‘negligent.’ 37 The next question is whether this rule was affected by the enactment of s80 of the Evidence Act. 38 In the first place, it may be said that I accept the defendants submission that the reports of the ALRC may be used as an aid to construction of s80 of the Evidence Act under s34 of the Interpretation Act 1987 because those reports are capable of assisting the ascertainment of the meaning of the provision either to confirm that the meaning of the provision is the ordinary meaning conveyed by the Act (paragraph 34(1)(a)) or because s80 is ambiguous or obscure (sub-paragraph 34(1)(b)(i), see especially subs-paragraph 34(2)(b) and (f)). Alternatively, they may be used under the principle explained by McHugh J in Newcastle City Council v GIO Insurance Ltd (supra, at 112) as follows:

‘... a court is permitted to have regard to the words used by the legislature in their legal and historical context and, in appropriate cases, to give them a meaning that will give effect to any purpose of the legislation that can be deduced from that context. The context includes reference to the provision’s legislative history and the relevant reports of law reform bodies which detail the perceived evil requiring reform.’

39 When they are examined, those extrinsic materials reveal, to my mind, a clear intention to abolish the rule which prevented a properly qualified expert expressing an opinion as to the satisfaction or otherwise of a certain legal standard. Furthermore, this is what s80 achieved by using words of clarity and economy. The effect of s80 is not to permit evidence which goes to an ultimate issue at all events; neither is it a section which works to exclude evidence. Its effect is to remove the fact that the evidence goes to an ultimate issue from the reasons for which a court must or could exclude the evidence. That is the clear effect of both the words of s80 and the intention of the legislature and the ALRC as disclosed in the extrinsic materials to which I have referred. 40 I reject the plaintiffs’ contention that in some way the ALRC Report was obscure or confused as to what the ultimate issue rule was. On the contrary, although the Report identifies the difficulty of the so-called rule, to my mind, it clearly identified the subject of its discussion when it said (at p412 of the Interim Report) that ‘[i]t has been suggested that the true analysis of the rule is that it prohibits a witness applying any kind of a ‘legal standard’ to the facts’ and was clear beyond peradventure when it proposed that ‘the ultimate issue rule be abolished’ (at p413). The Second Reading Speech of the Attorney General, and in particular that extract I have quoted above, makes clear that the ALRC’s proposition was accepted and found expression in s80. 41 Furthermore, there is authority for this proposition. In Walton v Corporate Venture Pty Ltd (unreported, ACT Supreme Court, 6 June 1996) Miles CJ commented (at p11) that ‘[t]he old rule that an expert may not express an opinion on the ultimate issue that a court has to decide, died long ago and was buried by s80 of the Evidence Act 1995. But there is, for practical purposes, an immense difference between a doctor advising lawyers as to his opinion on the ultimate issue and the lawyer tendering that advice in proof of that issue.’ His Honour’s final comment can only be understood by reference to the preceding paragraph of the judgment where it emerged that the subject opinion was contained in a letter written by the expert to the plaintiff’s solicitor and divorced from any reasoning or relevant field of expertise. His Honour’s final remark should not be understood to detract from the balance of the quotation. 42 In Daniels v State of Western Australia [2000] FCA 858 (unreported, Federal Court of Australia, 21 of September) R.D. Nicholson J considered evidence of an expert anthropologist in the context of a claim under the Native Title Act 1993 (Cth) that ‘in my opinion, the Burrup is Ngarluma land and all members of the Ngarluma language group have interests in it under Aboriginal law.’ R.D. Nicholson J (at para 18) said:

‘Section 79 is followed by s80 in which it is provided that evidence of an opinion is not inadmissible only because it is about a fact in issue or an ultimate issue or a matter of common knowledge. That is also a change to the common law position. The opinion would not therefore be precluded from admission by the fact that it related to the ultimate issue of native title in relation to the Burrup.’

(iii) Effect of s80 on the Principles Regarding Admission of Evidence of Foreign Law

43    In this case, I do not find it necessary to decide whether Lindgren J was correct when he decided in Allstate that the words of s80 ‘are not apt to refer to expert legal opinion which impinges upon the essential curial function of applying the law, whether domestic or foreign to the facts.’ This is because, even if the evidence of the application of foreign law is accepted in this case, it will not ‘impinge on the essential curial function.’ The decision of Lindgren J in Allstate must be viewed within the context of the function to be performed by the application of foreign law in that case. The facts of that case (which can be found at (1996) 64 FCR 1 at 1 - 24) concerned, relevantly, the issue of a prospectus in the United States which, it was claimed, inter alia, breached s12(2) of the Securities Act 1933 (US). It was to that issue that the evidence of Mr Altman was directed. Mr Altman gave evidence that under that statute one of the parties would be ‘liable,’ this being one of the very issues the court had placed before it by the parties for determination. In other words, in that case, the Court was concerned with the direct application of foreign law to facts so as to determine the rights and liabilities of the parties under it and the evidence of Mr Altman sought to provide an opinion which, if accepted, would dispose of that very issue. 44 This case falls into a different category. Here, the Court is not concerned to administer foreign law for the purpose of determining the rights and obligations of the parties under foreign law. The facts in issue all occurred within the jurisdiction of this Court. No issues concerning the exercise of foreign jurisdiction over the facts of this case arise. Here the court is concerned with foreign law as a subsidiary fact necessary to determine the rights and liabilities of the parties under the law of New South Wales. The essential curial function of this Court in this case is the administration of and the proper application of the law of New South Wales. Evidence of foreign law experts as to the effect of foreign law, where the effect of foreign law is relevant to the administration of domestic law, is not capable of usurping the function of the court any more than is evidence of any other fact relevant to the determination of the rights and liabilities of the parties under domestic law. 45 Where in this case an expert on foreign law expresses an opinion of the effect of foreign law on the facts of this case he or she does nothing different from a properly qualified expert who expresses an opinion to the effect that a particular person was ‘negligent.’ To say that a person was negligent does not usurp the essential curial function of the court, for evidence that a person was negligent does not determine the issue of whether that person is liable to pay compensation to another. Even if the court accepts the evidence, there are further issues for determination before the courts essential function is complete: the negligence must have caused damage, the damage must not be too remote and under the common law, there must have been an absence of contributory negligence. Like evidence of foreign law in a case such as the present, an opinion that a person was negligent is one fact in the factual matrix necessary to establish the rights and liabilities of the parties. Evidence of a properly qualified expert that a person was ‘negligent’ is a paradigmatic example of the sort of evidence that s80 was concerned to make admissible, where prior to the Act it was inadmissible, provided the evidence is otherwise admissible under the Evidence Act. 46    When the Court receives evidence of foreign law, including evidence of its content and likely effect, the approach to be taken is, to my mind, similar to that identified by Street J (as he then was) in Ancher, Mortlock, Murray & Wooley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 where his Honour was concerned with conflicting expert evidence as to the existence of similarities or dissimilarities in certain architectural plans. Street J said at 286:

‘In view of the volume of expert evidence, and the differing views expressed by the expert witnesses, I should state the use that can be properly be made of that evidence in reaching a decision in a suit such as this. The decision upon the issue of similarity is an original decision for the court itself. It is to be reached upon an assessment of such similarities and dissimilarities as appear to the court between the plans or buildings under consideration. The fact that one particular expert of the highest authority and of unimpeachable credit is permitted to swear to an opinion on similarity or dissimilarity does not relieve the court of responsibility of forming its own opinion on this issue. In this sense the expert evidence in a suit such as the present fills a somewhat unusual role. It is almost as if each side calls an expert to argue out with counsel in examination-in-chief and cross-examination the similarity or dissimilarity which that particular expert sees between plans or houses. By attending to the progress of this argumentative process between counsel and expert the court is enabled to perceive more readily appreciate the points of similarity and dissimilarity. In this way the tendering of expert evidence is of value in exposing the facets of the ultimate question to which the expert evidence is directed. But the important point is that, in distinction from the judicial process in relation to expert evidence such as is normally encountered in litigation, a court in the present type of litigation is entitled to and, indeed, bound, to form and act on its own original opinion. ’
[emphasis added]

47    Likewise, in a case such as the present, it is necessary for the court to form its own view as to the effect of foreign law on the claims made by the plaintiffs, just as it is necessary for the court to form its own view on all the facts in issue necessary to determine the case. Expert evidence on such a question is necessary to inform the court of a matter in respect of which it is, ex hypothesi, ignorant. If the plaintiffs lead expert evidence in reply which is contradictory of the defendants expert’s opinions, the contrast of reasoning and conclusion will allow the court to better perceive the foreign law issue and its likely solution. Cross-examination of the expert witnesses and the testing of the views and conclusions of the experts may further aid the Court’s understanding. But no matter how eminent the various experts whose evidence is led by the parties and no matter how cogent or convincing their reasoning is and no matter how plausible their conclusion, the court must form and act upon its own view as to the effect of foreign law. This is also the approach of the High Court in Rogers v Whitaker (1992) 175 CLR 479 at 487 per Mason CJ, Brennan, Dawson, Toohey, McHugh JJ at 493 per Gaudron J.

48    The plaintiffs did not claim that the evidence was not relevant within the meaning of s55 of the Evidence Act. Neither did they contend that it was not properly within the exception to the opinion rule in 79. The only ground of exclusion claimed was that identified by Lindgren J in Allstate. For the reasons I have given, I reject this contention. Accordingly, I accept the defendants contention that in this case expert opinion evidence on the matter of foreign law may include the following matters:

(a) the existence, nature and scope of the rules and principles of law in a foreign jurisdiction.

(b) the meaning and effect to be given to both foreign statutory and common law.

(c) where rules and principles of foreign law are so framed as to confer discretions upon the courts which administer them, the court may receive evidence as to the manner in which those discretions are exercised, with reference to any pattern or course of decision

(d) the practice of regulators and other administrative bodies in applying and implementing relevant legislative and regulations in the course of undertaking an administration process.

(e) on the basis of specific and detailed assumptions about a putative business proposition, in order to give context and meaning to express opinions as to:
(i) how relevant regulators and relevant authorities would or would be likely as a matter of practice to deal with particular compliance issues, including


(A) how a regulator would be likely to characterise the business proposition

(B) any requirements that might be imposed by a regulator, by way of example, the need for business plans and evidence of industry support.


(ii) the likelihood as a matter of practice whether approval would be obtained and if so on what terms.

(iii) the time period in which such approval could be obtained,
(iv) the costs of obtaining the approval and meeting ongoing compliance issues.

Conclusion

49    In the light of the above decision as to principle the court invites the parties to revisit the particular objections which had been pressed in an attempt to reach a consensus as to whether any and if so which particular objections are still to be pressed.

I certify that paragraphs 1 - 49
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein
given on 23 November 2000

___________________
Susan Piggott
Associate
23 November 2000

Last Modified: 06/13/2002