Kane (a pseudonym) v The King; Moon (a pseudonym) v The King

SUPREME COURT OF VICTORIA
COURT OF APPEAL

S EAPCR 2023 0068

S EAPCR 2023 0080

ADAM KANE (a pseudonym)[1]	Applicant
v
THE KING	Respondent
DANIEL MOON (a pseudonym)	Applicant
v
THE KING	Respondent

[1]So as to prevent any risk of prejudice to the proper administration of justice, these reasons for judgment have been anonymised by the adoption of pseudonyms in place of the names of the applicants.

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JUDGES:	PRIEST and BEACH JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	5 December 2023
DATE OF JUDGMENT:	7 December 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 305
JUDGMENT APPEALED FROM:	DPP v [Kane] [2023] VCC 663 (Judge Murphy)

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CRIMINAL LAW – Interlocutory appeal – Review of refusal to certify – Trial pending for aiding, abetting, counselling or procuring attempted possession of a commercial quantity of an unlawfully imported border controlled drug, cocaine – Foreign material – Report by US law enforcement agent containing hearsay representations – Whether business record – Whether trial judge should have given direction that foreign material not be adduced – Whether probative value of evidence outweighed by danger of unfair prejudice – Leave to appeal granted – Appeal allowed.

Foreign Evidence Act 1994 (Cth) ss 24 and 25; Evidence Act 2008 (Vic) s 137; Criminal Procedure Act 2009 s 295(3)(a) and 297(1).

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Counsel
Applicants:	Mr J Connolly
Respondent:	Mr S Ginsbourg and Ms N Grunwald
Solicitors
Applicant Adam Kane:	Chris McLennan & Co
Applicant Daniel Moon:	Kings Law Group
Respondent:	Commonwealth Director of Public Prosecutions

PRIEST JA
BEACH JA:

Introduction

An indictment filed in the County Court charges the applicants, ‘Adam Kane’ and ‘Daniel Moon’, with aiding, abetting, counselling or procuring the attempted possession of a commercial quantity of an unlawfully imported border controlled drug, cocaine, by ‘FTRJ’.[2] The Amended Summary of Prosecution Opening[3] alleges that the applicants and FTRJ each played a role in an attempt to possess at least 25 kilograms of cocaine that they believed had been imported into Australia from Colombia. A jury is yet to be empanelled.
[2]Criminal Code (Cth), ss 11.1(1), 11.2(1) and 307.5(1).
[3]See Criminal Procedure Act 2009, s 182.
As part of its case, the prosecution seeks to adduce evidence of certain hearsay representations contained in two paragraphs of a report prepared by Special Agent Matthew Reidell (for convenience, ‘Reidell’), a Supervisory Special Agent with the US Immigration and Customs Enforcement (‘ICE’), Homeland Security Investigation (‘HSI’) (‘the report’).[4]
[4]See [14] below.
At a pre-trial hearing, counsel for both applicants challenged the admissibility of the hearsay representations in the report. In a ruling dated 24 April 2023, however, the trial judge refused to exclude the impugned evidence, in substance holding that the evidence was admissible under s 25 of the Foreign Evidence Act 1994 (Cth) (‘FEA’), and did not fall to be excluded under s 137 of the Evidence Act 2008 (Vic) (‘EA’) (‘the evidentiary ruling’ or ‘the interlocutory decision’). Thereafter, on 1 May 2023, the judge refused to certify under s 295(3)(a) of the Criminal Procedure Act 2009 (‘CPA’) that the evidence, if ruled inadmissible, would eliminate or substantially weaken the prosecution case (‘the certification ruling’).
In this Court, Kane and Moon now seek a review of the certification ruling; and, if successful, seek leave to appeal against the interlocutory decision. The grounds for the application to review the refusal to certify in each case are:
1The learned trial judge applied the ‘substantially weaken’ test on an incorrect factual basis;
2It was not reasonably open for the learned trial judge to find that the exclusion of the evidence would not ‘substantially weaken the prosecution case’.
Kane’s five proposed grounds in the application for leave to appeal the interlocutory decision are:
1It was not reasonably open for the learned trial judge to find that admitting the business record would not result in unfair prejudice to the accused;
2It was not reasonably open for the learned trial judge to find that the representations contained within the business record were reliable;
3It was not reasonably open for the learned trial judge to conclude that the business record should not be excluded pursuant to [the] Foreign Evidence Act 1994 (Cth) s 25.
4The learned trial judge erred in principle in his construction of the applicability of [the] Evidence Act 2008 (Vic) s 137 in combination with [the] Foreign Evidence Act 1994 (Cth) s 25.
5The business record fell to be excluded pursuant to [the] Evidence Act 2008 (Vic) s 137, and it was not reasonably open for the learned trial judge to fail to so order.
Moon relies on four proposed grounds in his application for leave to appeal:
1His Honour erred in failing to conclude that the applicant would suffer unfair prejudice by failing to take into account a relevant factor, namely the reliability of the maker of the statements, ‘Jorge’;
2In concluding that the business record should not be excluded pursuant to s 25 [of the] Foreign Evidence Act 1994 (Cth), his Honour erred by failing to have regard to the fact that S/A Reidell will be called to give evidence in the trial and therefore the evidence is available to the prosecution within the meaning of s 25(2)(a) [of the] Foreign Evidence Act 1994 (Cth);
3The learned trial judge erred in holding that evidence not excluded under s 25 [of the] Foreign Evidence Act 1994 (Cth) could not be excluded pursuant to s 137 [of the] Evidence Act 2008.
4The business record fell to be excluded pursuant to s 137 [of the] Evidence Act 2008, and it was not reasonably open for the learned trial judge to fail to so order.
In our view, the application to review the failure to certify should succeed; leave to appeal granted; the appeal allowed; and the interlocutory decision set aside. Our reasons follow.

The prosecution case

To understand the issues raised by the applications, it is necessary to provide a brief outline of the prosecution case.
The prosecution alleges that, in late May 2018, Colombian and US law enforcement agencies received information that a Colombian drug trafficking syndicate intended to sell a large quantity of cocaine to Australian buyers. In June 2018, syndicate members were in contact with a person whom syndicate members believed could assist delivery to the Australian buyers. Unknown to them, however, that person was an undercover Colombian police officer, Major Jeyson Labiosa. On 14 and 20 June 2018, the syndicate delivered 97 kilograms of substance containing cocaine to Labiosa, that substance subsequently being analysed and destroyed.
While these events were occurring, ‘David’, now deceased, a trusted associate of the Colombian syndicate, was secretly providing information about the syndicate’s activities to Reidell.[5] In Labiosa’s presence, David communicated by telephone from Columbia with representatives of the Australian purchaser of cocaine. David informed Reidell that the number he was calling was the Australian mobile service number 0411 251 036 (‘the 036 number’). Prior to 20 June 2018, the 036 number was given to Australian Federal Police (’AFP’), who then obtained a telephone interception warrant to monitor it. On 27 June 2018, the AFP intercepted three telephone calls from a Colombian mobile telecommunications service to the 036 number, answered by an unidentified male. The Colombian caller said that ‘everything is ok’ and that someone from ‘where you are’ would call to arrange a ‘face to face’ meeting, prompting the male to reply, ‘I’ll be waiting for you’.
[5]It is anticipated that Special Agent Matthew Reidell will give evidence that David is now deceased.
It is alleged that, on 9 July 2018, an AFP undercover operative, ‘Agent 811’, made contact with the unidentified male using the 036 number and told him that the ‘delivery you’re expecting … it’s all good to go’. The male replied, ‘Alright champ’. Subsequently, a second AFP undercover operative, ‘Agent 000’, made contact with the male using the 036 number and arranged to meet him in Melbourne. The prosecution case is that, between 9 and 15 July 2018, FTRJ and the applicants acted together in an attempt to collect the cocaine from the two Agents, who pretended to have control of drugs supplied by the Colombian syndicate. During this period, FTRJ and the applicants operated the mobile service for the 036 number. On 12 July 2018, they flew from Sydney to Melbourne, where FTRJ met Agent 000 and negotiated the terms of payment for the transportation and collection of up to 27 kilograms of cocaine.
On 15 July 2018, FTRJ and Moon together drove to the Best Western Airport Motel and Convention Centre in Attwood, Victoria, after Agent 811 had indicated that he would leave 25 kilograms of the cocaine inside a specified room at the motel. FTRJ entered the room and took possession of a bag that he believed contained the cocaine, whilst Moon waited nearby after having helped FTRJ access the motel room. The bag in fact contained 25 kilograms of an inert substance that the AFP had packaged to resemble the cocaine that had been delivered to Major Labiosa in Colombia. The AFP immediately arrested both FTRJ and Moon. On 15 August 2018, the AFP arrested the applicant Kane, who had returned to Sydney on 13 July 2018.
The prosecution alleges that FTRJ was the primary contact in relation to the collection of the bag that he believed contained cocaine, and intended to take possession of at least 25 kilograms of cocaine that had been unlawfully imported from Colombia. Moon and Kane each knowingly assisted FTRJ in his attempt to do so.

The challenged evidence

As we have indicated, counsel for the applicants objected to the admissibility of certain contents of the report, which is annexed to an affidavit sworn by Reidell on 15 August 2022. On its face, the report purports to be a ‘Report of Investigation’ by the Department of Homeland Security: Homeland Security Investigations, relating ‘Operation Brick Thrower’, prepared by ‘Matthew Reidell, Special Agent’, dated 19 June 2018. The report is marked, ‘Official Use Only: Law Enforcement Sensitive’. In his affidavit, Reidell deposed that he had prepared the report. That part of the report challenged by the applicants before the trial judge is as follows:
SA-1121-NO received an additional Australian target phone number of 61-0411251036. This number was given to SA-1121-NO by JORGE (main Colombian organizer of cocaine) as the point of contact in Australia. The person utilizing this phone number is receiving approximately 50 kilograms of cocaine.
...
On June 16, 2018, at approximately 2040 hours, SA-1121-NO conducted a brief consensually recorded phone number to target phone number 61-0411251036. During the call SA-1121-NO advised the unidentified male target someone would be contacting him in Australia to meet.
In this Court, counsel for the applicants limited their attack to the contents of the first only of the two paragraphs of the report set out immediately above. Understanding ‘SA-1121-NO’ to be a reference to David, the paragraph can be seen to contain at least three hearsay representations: first, ‘Jorge’ gave David the 036 number as the point of contact in Australia; secondly, Jorge was the main Colombian organiser of the cocaine; and, thirdly, the person using the 036 number is receiving approximately 50 kilograms of cocaine.

Submissions to the trial judge

Relying on s 25 of the FEA, and s 137 of the EA, counsel for the applicants — whilst conceding that the report was a ‘business record’ — submitted to the trial judge that it would be unfair to permit the prosecution to adduce the hearsay representations in the report. Counsel submitted that, in circumstances where the report contained ‘third-hand hearsay’, it would be unfairly prejudicial to the applicants to admit its contents into evidence. It is unfair to permit the prosecution to rely on law enforcement investigatory notes as to the truth of the allegations asserted therein to prove the very subject-matter of the investigation for which investigation they were made. Counsel submitted that the probative value of law enforcement investigatory notes reliant on remote hearsay is low, but the risk of unfair prejudice is high because the defence has no realistic means of testing the evidence. Any difficulty that the prosecution might have in adducing evidence from overseas is not relevant to determining whether the evidence is unfairly prejudicial to the applicants.

The evidentiary ruling

In his reasons for refusing to exclude the impugned part of the report, the judge noted that the applicants conceded that the report was a ‘business record’ as defined in s 3(1) of the FEA; and observed that it was clear ‘that the FEA is designed to facilitate the admission of business records, as widely defined, in Australian court proceedings’. He said that it ‘is important to note that s 24 of the FEA clearly abrogates the rule against the admissibility of hearsay’; and that, in this respect ‘it is similar to the provisions of section 69 of the Evidence Act’.
Turning to s 25(1), the judge noted that the court may direct that the foreign material not be adduced as evidence if ‘having regard to the interests of the parties to the proceeding, justice would be better served if the foreign material were not used as evidence’. The judge then set out ss 25(2)(a) to (e), containing five non-exclusive criteria that the court may take into account in deciding whether to give a direction that the foreign material not be adduced as evidence.
Next, the trial judge referred to various observations in Milne[6] and Yau.[7] He noted that the prosecution seeks to rely on the representations contained in the report ‘for the truth of its [sic] contents’; and that the prosecution seeks to do this as part of its circumstantial case to link users of the 036 number — including the two applicants and FTRJ — to the Colombian cartel members who were the suppliers of the proposed cocaine shipment. The ‘particular representations in the document’, the judge said, ‘are items in the overall circumstantial case linking each accused and the principal, both by links with the 036 number and other real evidence and intercepted communications, with the ICD [international controlled delivery] shipment to Australia’.
[6]R v Milne (No 1) (2010) 260 FLR 166, 228 [270] and 233 [299] (Johnson J) (‘Milne’).
[7]R v Yau [2017] SASCFC 4, [77] and [80] (Blue J); [185]–[186] and [217] (Doyle J) (‘Yau’).
The trial judge noted that the applicants’ opposition to adducing the report, and the representations contained in it, is that Reidell, giving evidence via video link from the USA, ‘would be giving evidence about a document that contains thirdhand hearsay, being a statement by the alleged Colombian organiser Jorge, to the undercover agent “David” recorded by Mr Reidell’. Counsel for the applicants, the judge said, based their objections to the evidence on the following matters: first, the document ought not be admitted as it does not meet the requirements for admissibility under s 24 of the FEA; secondly, if the document meets the requirement of the FEA, then the evidence ought be excluded in the application of the balancing discretion in s 25; thirdly, ‘in the event that the document were to be adduced under section 25 then it ought in any event be excluded as being unfairly prejudicial under section 137 of the Evidence Act’.
Further, the trial judge noted that the applicants’ counsel had submitted ‘that seeking to adduce the document under the FEA was inherently unfair and prejudicial in circumstances where when Mr Reidell gives evidence he would not be able to give evidence of the representations contained therein as they would be inadmissible hearsay and would be inadmissible a number of bases’. Those bases were, first, the document contained inherently unreliable thirdhand hearsay, being the statement made to David by Jorge. The defence would not be able to explore the circumstances in which Jorge obtained the phone number — including from whom he obtained the phone number and when — or the circumstances in which Jorge conveyed the information to David. Secondly, the prosecution would not be entitled to lead the evidence from Reidell, since the evidence is from a document ‘made in connection with an investigation relating or leading to a criminal proceeding’, and thus would not be a business record for the purposes of the exception to the hearsay rule set out in s 69(3)(b) of the Evidence Act 2008. Thus, the prosecution is seeking to introduce via the ‘back door’ evidence that it could not adduce viva voce from Reidell.
The trial judge observed that the prosecution had submitted that, unless the report is admitted, the prosecution would not be able to prove the relevant representations, since David is now deceased, and Jorge, the original provider of the information to David, is of unknown whereabouts. Hence, the makers of the representations would not be available, and the evidence could not be adduced unless the report was admitted. The evidence was highly relevant and supported by other contemporaneous evidence. Thus, the provenance of the 036 number is evidenced by another document, being a ‘screenshot’ of that number from David to Reidell, and the use of the number by FTRJ and the two applicants. The number 036, and its connection to the drug cartel in Colombia, was, having regard to its later use by the applicants, highly relevant and probative in the overall case.
Significantly, the judge concluded that the report provided evidence that would not otherwise be available, and is of ‘significant probative value’, so that ss 25(2)(a) and (b) of the FEA were engaged.
Next, the judge noted the applicants’ objections to the evidence based on ss 25(2)(c) and (e), observing that the defence submitted that Reidell could not be cross-examined effectively, and both David and Jorge were unavailable. The representations in the report are second and thirdhand hearsay. Hearsay is inherently unreliable and admission of the report in the present circumstances is unfairly prejudicial to the defence. The judge noted that the prosecution submitted, however, that the mere fact that the defence will be unable to cross-examine the maker of the representations does not render the representations inadmissible, and cannot be a determinative factor. On its face the document appears to be a regular recording of information received by Reidell from David, who had been provided the information by Jorge.
The judge remarked that the ‘reason why business records are held to be admissible as an exception to the hearsay rule is their reliability’. Moreover, ‘Parliament in the FEA chose to exclude from the hearsay rule all business records’. In the present case it can be asked rhetorically: why would David not faithfully relay the information he had obtained from Jorge to his controller Reidell; and why would the latter not seek to properly record it? Thus, ‘contextual evidence supports the reliability of the representations in the document, notwithstanding that “David” and Jorge cannot be cross-examined’.
Ultimately, the judge stated his conclusions concerning the application of s 25 of the FEA as follows:
Conclusion: section 25 considerations favour admission
65Having regard to the considerations just discussed, I conclude that the representations in the document are of significant probative value to the prosecution. The representations would not be available just by calling Mr Reidell. The nature of the representations are such that they are likely to be reliable. Inferences from the document itself support reliability. Other contextual materials support that conclusion.
66The ability of the defence to cross examine the makers of the representations while giving rise to some unfairness, does not rise to unfair prejudice for the purposes of subsection 25(2)(e). A consideration of the purpose of the provisions of Part 3 of the FEA supports admission of the document. By calling Mr Reidell the prosecution is not seeking to subvert the purposes of Part 3, and could in any event rely on the document.
67For all these reasons I do not accept that the document should not be adduced.

Finally, with respect to the application of s 137 of the EA, the evidentiary ruling included the following:
Should the document be excluded under section 137 of the Evidence Act?
68Whether the further process of considering whether the document should be excluded if its probative value is outweighed by the danger of unfair prejudice under section 137, notwithstanding that the document, or the representations therein, have been held to be able to be adduced under the discretion in section 25 of FEA is a matter that was not directly addressed in Yau. In Milne at [311] the court noted for the same reasons that apply under section 25, and noting that under section 137 the requirement is that there be ‘unfair prejudice and not bare prejudice’, the court held that the same considerations apply.
69As a matter of principle, if the evidence passes through the gateway of section 25 then I am not satisfied that a requirement to consider section 137 of the Evidence Act is necessary. It is difficult to see what additional factors would be weighed under section 137 that are not included in section 25 particularly given the reference in section 25(1) to the ‘interests of the parties’ and the reference to the probative value of the material, and unfair prejudice to any party under subsections 25(2)(b) and (e).
70Using section 137 to exclude the evidence would, in my opinion, be to undermine the ‘legislative effect of the 2010 amendments to the FEA that the absence of persons who could shed some light upon the representations recorded in the documents is not sufficient (on its own) to warrant a discretionary exclusion under section 25 of the Act’. (Milne at [249].
71It would also be consistent with the discussion in [Papakosmas v The Queen (1999) 196 CLR 297, 327 [97]]. Similarly, in Schanker v The Queen [2018] VSCA 94 at [101] which referred to the policy of section 60 of the Evidence Act which provides that the hearsay rule evidence does not apply to admitted for a purpose other than proof of an asserted fact.
72Were it necessary to consider the matter, I would not exclude the document under the weighing process in section 137 of the Evidence Act.
73In DPP (Vic) v Curran [2012] VSCA 244 evidence was admitted where the defence was unable to cross examine the maker of the statement. It was held that the probative value of the evidence outweighed any unfair prejudice. It was held that an appropriate direction to the jury under section 165 of the Evidence Act ‘will ordinarily overcome the problem to the extent that the statement should be admitted’. (At [55])
74As I have noted, the evidence has significant probative value. For the reasons discussed are not satisfied that this is outweighed by the any unfair prejudice to the defence.
….
76Conclusion – application to exclude adducing [the report] is refused.

The certification ruling

As we have indicated, after the evidentiary ruling was delivered, counsel for the applicants asked the judge to certify under s 295(3)(a) of the CPA that the evidence, if ruled inadmissible, would eliminate or substantially weaken the prosecution case.
In refusing certification, the judge said (among other things):
8Having considered the competing submissions on the significance of the FEA document, I am satisfied that it is a significant piece of evidence, possibly properly characterised as a very significant piece of evidence. As the learned prosecutor submitted, however, in the event that it was inadmissible, the prosecution case would not be bereft. It would be still open to link the 036 number Colombia and to the cartel, including through the use of that number by David and his provision of that number to Mr Reidell. Then the prosecution complements that evidence with the actions of the offenders in Australia.
…
12My ruling on the admissibility of the FEA material involved a balancing of the matters set out in s 25 of the FEA. The particular item of evidence in dispute here is a significant strand in the cable of the prosecution case. On that basis I allowed the evidence to be admitted under the FEA. On the question of the significance of this item of evidence, I accept the submission by [the prosecutor] that it is significant but not that it can be characterised as only ‘icing on the cake’. Such a description is not applicable in a circumstantial case in any event. I am not satisfied however that elimination of the evidence would ‘substantially weaken’ the prosecution case as that phrase under authorities such as Paulino and Peterson has been considered. It would certainly weaken the case but the prosecution case on a circumstantial basis would still stand. The prosecution could still on an inferential basis provide a link between the 036 number and the cartel and the subsequent shipment of cocaine. Certainly the evidence does not rise to the level where its exclusion ‘could realistically be expected to affect the outcome’.
13I am satisfied that on any view elimination of the evidence would not anywhere near approach elimination of the prosecution case, nor require the prosecution to reconsider whether it should proceed with its case.

Analysis

On a review of a judge’s refusal to certify, s 296(4) of the CPA requires the Court to consider the matters in s 295(3), and permits the Court to give leave to appeal against the interlocutory decision ‘if satisfied as required by section 297’. Under s 295(3)(a) the Court must consider whether, if ruled inadmissible, the impugned evidence ‘would eliminate or substantially weaken the prosecution case’. By virtue of s 297(1), the Court may grant leave to appeal if ‘satisfied that it is in the interests of justice to do so’, having regard to a number of enumerated matters, including whether the determination of the appeal may ‘reduce the likelihood of a successful appeal against conviction in the event that the accused is convicted at trial’.
When determining whether the exclusion of evidence will ‘substantially weaken the prosecution case’, it needs be borne in mind that the adverb ‘substantially’ connotes evidence which is of ‘major importance’, or, at least, ‘very important’ to the prosecution case.[8]
[8]ZL v The Queen (2010) 208 A Crim R 325, 329 [20] (Nettle JA); DPP v Wise [2016] VSCA 173, [11] (Warren CJ, Weinberg and Priest JJA); DPP v Martin (2016) 261 A Crim R 538, 558 [117] (Redlich, Weinberg and McLeish JJA); DPP v Paulino (2017) 54 VR 109, 119–20 [50] (Priest JA) (‘Paulino’). Cf Paulino, 112 [9] (Weinberg JA); Peterson (a pseudonym) v The Queen (2019) 57 VR 521, 523–4 [9] (Maxwell P and Taylor AJA).
In the present case, the judge acknowledged the importance of the challenged evidence. He described it as ‘a very significant piece of evidence’, and ‘a significant strand in the cable of the prosecution case’, having ‘significant probative value’, amounting to more than ‘icing on the cake’. But whilst observing that its exclusion ‘would certainly weaken the case’, the judge nonetheless concluded that ‘the prosecution case on a circumstantial basis would still stand’. The judge said that the prosecution case would not be ‘bereft’ if the evidence was excluded, and expressed the view that the evidence did not rise to the level where its exclusion ‘could realistically be expected to affect the outcome’.
In our opinion, when it is properly characterised and understood, the evidence constituted by the report is indeed very important to the prosecution case, if not of major importance.
As both the respondent’s written and oral submissions in this Court make clear, the prosecution relies on the report’s contents to prove that ‘David’ received the 036 number from ‘Jorge’, a representative of a Colombian supplier of purported cocaine; and, significantly, that Jorge told him that the number could be used to contact someone in Australia who had agreed to accept delivery of the cocaine. The prosecution relies on these facts as circumstantial evidence to establish that the applicants intended that their conduct would assist and encourage FTRJ to possess cocaine, either because they were parties to an agreement to use the 036 number to facilitate its collection, or because they were informed of the agreement by someone who trusted them to operate the number. In their oral submissions, the respondent’s counsel submitted that the judge was correct to assess the evidence as having ‘significant probative value’. Notwithstanding the obvious importance of the contents of the report to the prosecution case, however, the respondent’s counsel maintained that it had still been open to the judge to refuse certification, since there is other evidence which independently supports the inference that the applicants intended that their conduct would assist or encourage FTRJ to possess cocaine.
Emphasising the importance of the impugned evidence to the prosecution case, the applicants’ counsel submitted that without it there is no direct evidence that the 036 number was used to communicate with the Colombian cartel. The challenged part of the report is the only evidence that directly links the 036 number to the Colombian cartel, and therefore to anything that occurs in Colombia. Without the evidence of David’s representations contained in the report, the prosecution will only be able to establish that the cartel was arranging a consignment to unknown persons in Australia. The applicants’ counsel argued that, without the evidence connecting the 036 number to the cartel — and thus the seized delivery — the prosecution would not be able to establish for whom the delivery was intended. Furthermore, the impugned evidence also attributes to the user (or users) of the 036 number an intention to take delivery of approximately 50 kilograms of cocaine.
We accept the submissions of the applicants’ counsel with respect to the importance of the impugned evidence. Although we consider that the prosecution case would not be eliminated if the challenged evidence was ruled inadmissible, it is abundantly clear that the prosecution case would be substantially weakened without it.
In our view, the hearsay representations in the report are the keystone locking the various segments of the prosecution’s circumstantial case into position. It cannot be gainsaid that the hearsay evidence in the report is valuable — if not indispensable — evidence that directly links the 036 number to the Colombian cartel (and to anything that occurs in Colombia); and that, without the impugned evidence, there is no direct evidence that the 036 number was used to communicate with the Colombian cartel. Without the three unambiguous and pointed hearsay representations — that Jorge was the main Colombian organiser of the cocaine; that Jorge gave David the 036 number as the point of contact in Australia for the buyers; and that the person (or persons) using the 036 number was (or were) receiving approximately 50 kilograms of cocaine — the prosecution is left with a comparatively convoluted circumstantial case, consisting of a number of elements that will need to be made to coalesce before any jury could be satisfied of the applicants’ guilt. To that extent, the prosecution case will be substantially weakened without the challenged evidence.
We therefore consider that the provisions of s 295(3)(a) of the CPA to have been met, and that the grounds seeking review of the judge’s refusal to certify have been made out.
Moreover, we consider that it is in ‘the interests of justice’ to grant leave to appeal, and are of the view that the other relevant criteria in s 297(1) have been satisfied.
As previously mentioned, in submissions to the trial judge the applicants’ counsel conceded that the report was a business record for the purposes of the FEA. There is no occasion to consider whether the concession was or was not properly made, since the applicants’ counsel have not withdrawn it, and the Court was not asked to go behind it. Notwithstanding that concession, however, it is necessary to note that, for the purposes of the FEA, s 3(1) provides that business ‘has a meaning affected by clause 1 of Part 2 of the Dictionary in the Evidence Act 1995’; and business record means ‘a document that … is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business’ (or ‘at any time was or formed part of such a record’). In turn, cl 1(1)(c) of pt 2 of the Evidence Act 1995 (Cth) provides that a ‘reference in this Act to a business includes a reference to … an activity engaged in or carried on by the government of a foreign country’.[9]
[9]By cl 1(2), a reference in the Act to a ‘business’ includes a business that is not engaged in or carried on for profit, or a business engaged in or carried on outside Australia.
Consistently with the Commonwealth Act, pt 1 of the Dictionary to the EA provides that business ‘is defined in clause 1 of Part 2 of this Dictionary’; and by cl (1)(c) of pt 2 of the Dictionary it is provided that a ‘reference in this Act to a business includes a reference to … an activity engaged in or carried on by the government of a foreign country’. Importantly, however, the FEA has no provision corresponding to s 69(3) of the EA.
Section 69 of the EA, which contains the ‘business record’ exception to the hearsay rule, provides (so far as relevant):
69 Exception—business records
(1) This section applies to a document that—
(a) either—
(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or
(ii) at any time was or formed part of such a record; and
(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.
(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made—
(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or
(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.
(3) Subsection (2) does not apply if the representation—
…
(b) was made in connection with an investigation relating or leading to a criminal proceeding.
…
It is plain that the representations contained in the report were made in connection with an investigation which related or led to a criminal proceeding.[10] Hence, s 69(3) of the EA — the purpose of which is to reduce the risk of self-serving documents being admitted into evidence[11] — would present an insuperable hurdle to the admissibility of the hearsay representations contained in the report unless the prosecution is able to rely on the provisions of the FEA to clear it.
[10]Part 1 of the Dictionary to the EA defines criminal proceeding to mean ‘a prosecution for an offence’. A similar definition is found in s 3(1) of the FEA.
[11]See Vitali v Stachnik [2001] NSWSC 303, [12] (Barrett J); Thomas v New South Wales (2008) 74 NSWLR 34, 43–4 [25] (Campbell JA), 56 [88] (Gyles JA); Averkin v Insurance Australia Ltd (2016) 92 NSWLR 68, 88 [114] (Leeming JA).
By dint of s 20(1)(a) of the FEA, the provisions of pt 3 (ss 20 to 27) apply ‘to a proceeding, in any Australian court, that is … a criminal proceeding for an offence against the law of the Commonwealth’. It is not disputed that applicants are charged with such an offence.
Part 3 of the FEA is concerned principally with the use of foreign material, defined in s 3(1) to mean ‘the testimony of a person that … was obtained as a result of a request of a kind referred to in section 21’ and ‘complies with the requirements of section 22’ — there is no issue that Reidell’s testimony qualifies as such — ‘including any documents or things produced by or with such testimony’.
Significantly, ss 24 ad 25 of the FEA provide:
24Foreign material may be adduced as evidence
(1)Subject to this section, foreign material may be adduced in a proceeding to which this Part applies.
(2)The foreign material is not to be adduced as evidence if:
(a) it appears to the court’s satisfaction at the hearing of the proceeding that the person who gave the testimony concerned is in Australia and is able to attend the hearing; or
(b) the evidence would not have been admissible had it been adduced from the person at the hearing.
(3)Paragraph (2)(b) does not apply if:
(a) the foreign material is a business record; and
(b) the only reason why the evidence would not have been admissible had it been adduced from the person at the hearing is that an Australian law relating to hearsay evidence (however described) would have applied to the evidence.
(4)For the purpose of determining whether foreign material is a business record, and may be adduced as evidence, the court may:
(a) examine the foreign material; and
(b) draw any reasonable inference from the form and contents of the foreign material as well as from any other matters from which inferences may properly be drawn.
25Discretion to prevent foreign material being adduced—general
(1)The court may direct that foreign material not be adduced as evidence if it appears to the court’s satisfaction that, having regard to the interests of the parties to the proceeding, justice would be better served if the foreign material were not adduced as evidence.
(2)Without limiting the matters that the court may take into account in deciding whether to give such a direction, it must take into account:
(a) the extent to which the foreign material provides evidence that would not otherwise be available; and
(b) the probative value of the foreign material with respect to any issue that is likely to be determined in the proceeding; and
(c) the extent to which statements contained in the foreign material could, at the time they were made, be challenged by questioning the persons who made them; and
(d) whether exclusion of the foreign material would cause undue expense or delay; and
(e) whether exclusion of the foreign material would unfairly prejudice any party to the proceeding.
In this Court, one of the central contentions advanced by the applicants’ counsel was that the judge erred in his approach to the application of s 25 of the FEA. Another principal contention was that the judge erred by determining that, once a decision was made relying on the provisions of s 25 of the FEA not to direct non-adducing of impugned evidence, that decision in effect foreclosed the application of s 137 of the EA.
Briefly summarised, the respondent advanced the following contentions (among others). First, the trial judge correctly took into account under s 25(2)(a) of the FEA that the prosecution was not in a position to adduce evidence from David or Jorge. The mere fact that Reidell will be called to give evidence will not enable the prosecution to adduce evidence from him to prove the truth of the representations made by David and Jorge about the 036 number. Secondly, it was open to the trial judge to hold that s 25(2)(b) weighed against a direction that the evidence not be adduced since the report had ‘substantial probative value’ arising from its ‘unique significance’ as direct evidence that the Colombian syndicate provided the 036 number in connection with their supply of purported cocaine. This was so notwithstanding that other circumstantial evidence connected the 036 number to the delivery of purported cocaine in Colombia. Relying on IMM,[12] the respondent’s counsel submitted that the probative value of the evidence should not be conflated with an assessment of its credibility and reliability. Thirdly, s 25(2)(e) is confined to unfair prejudice arising from the ‘exclusion’ of foreign material. Nonetheless, the respondent’s counsel submitted that unfair prejudice to the applicants fell to be considered as part of the ‘overarching test’ contained in s 25(1), and under s 25(2)(c) of the FEA. The trial judge, counsel submitted, took these matters into account. Any suggestion that the judge did not consider the reliability of Jorge into account should be rejected. Finally, the respondent’s counsel submitted that the prosecution did not invite the judge to rule that, as a matter of construction, s 25 of the FEA limited the operation of s 137 of the EA. And while it might be the case that the trial judge strongly doubted that s 25 left any room for the operation of s 137, he nonetheless considered that the balancing exercise required by s 137 did not weigh in favour of exclusion.
[12]IMM v The Queen (2016) 257 CLR 300, 314 [48]–[49] (French CJ, Kiefel, Bell and Keane JJ) (‘IMM’).

There can be no doubt that ss 24 and 25 of the FEA are principally concerned with the circumstances in which foreign material may be adduced; that is, brought forward or produced.[13] By virtue of s 24(2), the general rule is that foreign material cannot be adduced as evidence from a person unless that person’s evidence would have been admissible at the relevant hearing. Thus, to the extent that the provisions provide generally that evidence that is not admissible cannot be adduced, they focus attention on the admissibility of the evidence, including any exclusionary rules of evidence. And beyond the specific reference to hearsay evidence in s 24(3), the statutory text gives no indication that the provisions are intended to affect any other exclusionary rules of evidence. Certainly, hearsay aside, ss 24 and 25 cannot be construed as making foreign material exempt from the exclusionary evidentiary rules of admissibility simply because it consists of a business record.
[13]The Oxford English Dictionary defines adduce as follows: ‘To bring forward (a person or thing), esp. in support of a case or an argument; to produce (a witness); to cite as evidence (a fact, an example, etc.)’.
In the context of this case, we consider that the general rule established by s 24(2) of the FEA means that the testimony of Reidell — including any documents produced by or with such testimony — is not to be adduced as evidence, if the evidence would not have been admissible had it been adduced from him at the hearing. Hence, the starting point must be that, unless the general rule in s 24(2) can be displaced by the provisions of s 24(3), the evidence of the contents of the report could not be adduced as evidence. The effect of s 24(3) is that, if the only reason why the report could not have been adduced is because its contents infringed the hearsay rule, then the evidence may be adduced if the report is a business record. A necessary corollary is, of course, that if the business record evidence is inadmissible for a reason other than its hearsay quality, its inadmissibility cannot be cured by s 24(3).
To risk repetition, the applicants’ counsel conceded that Reidell’s report is a business record. As a result, notwithstanding the hearsay nature of its contents, s 24(3) would permit the report to be adduced unless it fell to be excluded for some other reason.
Section 25 provides circumstances in which a document such as the report produced by Reidell’s testimony not be adduced as evidence. Thus, if it had appeared to the trial judge’s satisfaction in this case that, having regard to the interests of both the prosecution and defence, justice would be better served if the contents of the report were not adduced as evidence, the judge might have directed that the evidence not be adduced. In deciding whether he was satisfied that justice would be better served if the contents of the report were not adduced as evidence, the judge was required to take into account the non-exclusive list of matters set out in s 25(2)(a) to (e).
We consider that, as a matter of construction, the language of s 25(1) of the FEA imports a broad discretion permitting a court to direct that evidence not be adduced, the ultimate question being whether justice will be better served if it is not adduced. In determining whether justice will be better served if the evidence is not adduced, the court must have regard to the interests of the parties to the proceeding (that is, the prosecution and the accused), and must take into account the matters enumerated in ss 25(2)(a) to (e) — all of which bear on the question whether justice will be better served if the evidence is not adduced — although, as the introductory words in subsection (2) make clear, the five specified matters are not a complete catalogue of those considerations that may favour the evidence not being adduced. Quite plainly, any substantial failure by a trial judge to take into account one or other of the five relevant matters set out in subsection (2) will vitiate the exercise of the discretion imported by subsection (1), as will a failure to take into account any other material consideration, or taking into account irrelevant factors, bearing on the cardinal issue whether justice will be better served if the evidence is not adduced.
With respect to the individual matters in s 25(2), paragraph (a) required the judge to take into account the extent to which the foreign material provides evidence that ‘would not otherwise be available’. The judge held that the report contained evidence that would not otherwise be available. On one level that is correct. If the report cannot be adduced, the representations contained within it would not otherwise be available (if for no other reason) because of their hearsay nature. Certainly, Reidell could not give evidence of his own note.
Next, s 25(2)(b) required the judge to consider the extent to which the hearsay representations in the report could rationally bear upon a finding with respect to a fact in issue. The judge concluded that the report contained evidence that ‘is of significant probative value under subparagraph (b)’. As we have said, counsel for the respondent agreed that the evidence had significant probative value. We earlier discussed its importance.[14]
[14]See [37] above.
Under s 25(2)(c), it was necessary for the judge to consider ‘the extent to which [the hearsay] statements contained in the [report] could, at the time they were made, be challenged by questioning the persons who made them [David and Jorge]’. In applying s 25(2)(c) to support the adducing of the report, the judge said that ‘on its face the document appears to be a regular recording of information received by Reidell from “David” who had been provided by information from Jorge’; and that, ‘given the nature of the representations in the document, and the period of time that has elapsed, [cross-examination] is unlikely to be productive’. In this Court, counsel for the respondent submitted that the applicants’ counsel had advanced no hypothetical basis upon which the statements of David or Jorge could have been challenged at the time they were made.
By s 25(2)(d), the judge was required to consider whether the exclusion of the foreign material would cause undue expense or delay. It appears that the judge made no distinct finding on the issue of expense or delay, but that is not a matter of controversy in this Court.
Finally, s 25(2)(e) required a consideration of ‘whether exclusion of the challenged evidence would unfairly prejudice any party to the proceeding’. In the context of this case, paragraph (e) required the judge to consider whether the exclusion of the hearsay representations would unfairly prejudice the prosecution. That is not, however, the manner in which the judge proceeded.
Indeed, it is plain that the judge erred in his approach to the criterion in s 25(2)(e). Thus, the judge observed that the ‘ability of the defence to cross-examine the makers of the representations while giving rise to some unfairness, does not rise to unfair prejudice for the purposes of subsection 25(2)(e)’.[15] By adopting that approach, the judge considered whether adducing the evidence would be unfairly prejudicial to the applicants due to the inability of the applicants to cross-examine David or Jorge. But subs (2)(e) is not concerned with whether it will be unfairly prejudicial if the impugned evidence is adduced. Rather, paragraph (e) is directed to whether the exclusion of the evidence would unfairly prejudice any party to the proceeding. Neither party suggested that the exclusion of the report’s contents would be unfairly prejudicial to the applicants. The approach that the judge took had the effect of inverting the question that he was required to consider. Quite clearly, he misdirected himself in the purported application of subs (2)(e). For that reason alone, the judge’s exercise of discretion miscarried.
[15]See [26] above.
Furthermore, we consider that the following observations by the judge betray error:
As a matter of principle, if the evidence passes through the gateway of section 25 [of the FEA] then I am not satisfied that a requirement to consider section 137 of the Evidence Act is necessary. It is difficult to see what additional factors would be weighed under section 137 that are not included in section 25 particularly given the reference in section 25(1) to the ‘interests of the parties’ and the reference to the probative value of the material, and unfair prejudice to any party under subsections 25(2)(b) and (e).
Using section 137 to exclude the evidence would, in my opinion, be to undermine the ‘legislative effect of the 2010 amendments to the FEA that the absence of persons who could shed some light upon the representations recorded in the documents is not sufficient (on its own) to warrant a discretionary exclusion under section 25 of the Act’. (Milne at [249].[16]
[16]It is probable that the judge intended a reference to Milne, 232 [294].
It is not clear to us why, as ‘a matter of principle’, the judge was ‘not satisfied’ that it was necessary to consider the provisions s 137 of the EA ‘if the evidence passes through the gateway of s 25’. As we have observed, if business record evidence is inadmissible for a reason other than its hearsay quality, its inadmissibility cannot be cured by s 24(3) of the FEA.[17] Hence, if — quite apart from its hearsay quality — the evidence is inadmissible because its probative value is outweighed by the danger of unfair prejudice to the accused, it could not be saved by s 24(3). In that regard, the authorities make plain that there is no element of discretion accompanying the judicial exercise contemplated in s 137. Section 137 ‘is expressed in terms of an evaluative judgment mandating exclusion’.[18] If the probative value of evidence is outweighed by the danger of unfair prejudice to the accused the evidence simply is inadmissible.
[17]See [50] above.
[18]IMM, 306–7 [16] (French CJ, Kiefel, Bell and Keane JJ). See also DPP v Wise (a pseudonym) [2016] VSCA 173, [50] (Warren CJ, Weinberg and Priest JJA); Paulino, 132 [101] (Priest JA).
It is also unclear to us why the judge was of the opinion that the use of s 137 — to exclude evidence the probative value of which was outweighed by the danger of unfair prejudice — would ‘undermine’ the provisions of the FEA. Indeed, in Milne, the authority referred to by the judge in the passage above[19] — a case in which the accused charged with money laundering (and other offences) sought the exclusion of foreign business records relating to company structure, share transfers and use of proceeds — Johnson J first considered the applicability of s 25 of the FEA, before turning to the admissibility of the evidence under s 137 of the Evidence Act 1995 (NSW). Although Johnson J was of the view that the various factors he considered for the purposes of s 25 of the FEA were also relevant to a consideration of s 137, ultimately he declined to exclude the foreign business records under s 137 because he was ‘not satisfied that the probative value of the foreign business records is outweighed by the danger of unfair prejudice to the accused’.[20] Nothing in Milne would, however, justify the conclusion that a decision under s 25 of the FEA necessarily would foreclose reliance upon s 137 of the EA, or decisively dictate the result of an application to exclude evidence based upon it.
[19]At [60]. See also [19] and [27].
[20]Milne, 235 [311].
Although we note that the judge said that, were it ‘necessary’ for him to consider the matter, he would not exclude the report ‘under the weighing process’ in s 137, it is clear that the judge misdirected himself as to the manner in which s 137 of the EA might bear upon the admissibility of the impugned evidence. So much is another factor vitiating the interlocutory decision.
We are also of the opinion that, insofar as he may have considered the danger of unfair prejudice, the judge gave too much weight to the supposed reliability of the evidence. As we have noted, the judge remarked that the ‘reason why business records are held to be admissible as an exception to the hearsay rule is their reliability’.[21] The judge also said that s 24 of the FEA ‘clearly abrogates the rule against the admissibility of hearsay’, and in that respect is ‘similar’ to the provisions of s 69 of the EA.[22]
[21]See [25] above.
[22]See [17] above.
At a superficial level, it is true to say that the rationale that underpins the business record exception to the hearsay rule is the notion that business records are inherently reliable. That is because it has been recognised that when the activity of a business is recorded, the records are likely to be a far more accurate and reliable source of truth than memory. For its efficient conduct, any significant business must depend upon proper records made by persons who have an interest to record as accurately as possible matters relating to the business. In the day-to-day conduct of the activities of the business, people look to, and depend upon, business records, and use them on the basis that they are most probably accurate.[23] Thus, the rules of evidence have for a long time accorded a special status to business records.
[23]See, e.g., Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542, 548–9 (Hope JA).
But the report in this case is not a record of the kind to which the law has traditionally afforded special status. Indeed, it is of a kind for which s 69(3) of the EA effects a carve-out from the business record exception to the hearsay rule, in recognition that documents made in relation to a criminal investigation may well be self-serving, slanted or otherwise unreliable. Thus, insofar as the judge approached the report from the perspective that it was inherently reliable because it fitted the statutory description of business record, we consider that he took into account an irrelevant consideration.
As we have indicated, the interlocutory decision is vitiated by error. It cannot be permitted to stand.
In our opinion, a direction should have been given under s 25(1) of the FEA that the foreign material constituted by the report not be adduced in evidence. By reason of s 25(2) of the FEA it ‘would not have been admissible had it been adduced from the person at the hearing’, since, consistently with s 137 of EA, its probative value was outweighed by the risk of unfair prejudice. There is a danger of unfair prejudice to the applicants since there is no way of testing the credibility or reliability of the hearsay representations in the report, in the peculiar circumstances that Reidell could not give oral evidence of them. Indeed, to some extent the danger of unfair prejudice flows from the risk that a jury will — despite judicial warnings — regard the evidence as having credibility and reliability it does not deserve, and give it undeserved weight as a result. The risk that the jury will thereby misuse the evidence cannot be acceptably ameliorated by jury directions.
Moreover, quite apart from the influence of s 137 of the EA, we consider that the proper application of the criteria in s 25(2) of the FEA — particularly s 25(2)(b) and (c) — together with other matters, should have resulted in a direction being given under s 25(1).
Plainly, there is no capacity in the applicants to test the credibility or reliability of the evidence, or its two alleged sources. Self-evidently, questions that might have been capable of being directed at David and Jorge to challenge their evidence at the time that they made their representations cannot now be asked.
And significantly, there can be no doubt that the contents of the report could only be adduced if the report is to be afforded the status of a business record. Without that status, the hearsay representations would have no probative value whatsoever, since they would be inadmissible hearsay. Thus, through use of a device, the prosecution is seeking to introduce otherwise inadmissible evidence. That is a matter which bears on the overarching question of whether ‘justice would be better served if the foreign material were not adduced as evidence’. In our view, it would.
Finally, we would observe in relation to s 25(2) of the FEA that the exclusion of the report will not unfairly prejudice the prosecution given the ‘vast array’ of circumstantial evidence its counsel claimed was capable of establishing the representations in the report upon which the prosecution case relies.

Conclusion

The interlocutory decision must be set aside.

[2023] VSCA 305

7 December 2023