Metroplaza P/L v Girvan NSW P/L

[1993] FCA 1055

JUDGMENT No. ...,k?.$ . ~ . . . l , ~ ~ . . . .

CATCHS~1ORDS

EVIDENCE - admissibility and relevancy - documents evidencing ~ntra-group corporate accounting - tender as to lssue of damages - fallure to discover relevant documents - possible prejudice - s 7M Evldence Act 1905 (Cth).

Evidence Act 1905 (Cth) - s 7M

METROPLAZA PTY LIMITED v GIRVNq NSW PTY LIMITED ( IN LIOUIDATIONI, C.C. (NEW SOUTH :VALES) PTY LIMITED (IN LIOUIDATION) formerlv known as COhCRETE CONSTRUCTIONS (NSW1 PTY LIMITED, LEIGII'I'ON CONTRACTORS PTY LIMITED, HOLLAND STOLTE PTY LIMITED, THE MASTER BUILDEIIS ASSOCTATION OF NSW. AUSTRALIAN FEDERATION OF CONSTRUCTTON CONTRACTORS. JOFIN CUNNINGHAM, MULTIPLEX CONSTRUCTIONS 3TY LIMlTED

SYDNEY

No. NG 5 of 1992

FOSTER J
l0 AUGUST 1993

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY j	)

NO. NG 5 of 1992

GENERAL DIVlSION 1

BETGJEEM:  METROPLAZA PTY LIMITED

Applicant

AND:  GIRVAN NSW PTY LIMITED (IN
L [QUIDATION)

Flrst Kespondent

C.C. (NEW SOUTH WALES) PTY LIMITED (IN LIQUIDATION) formerly known as CONCRETE CONSTRUCTIONS (NSW) PTY LIMITED

Second Respondent

LEIGHTON CONTRACTORS PTY

LIMITED

Third Respondent

IIOLLAND STOLTE PTY LIMITED

Fourth Respondent

THE XASTER BUILDERS

ASSOCIATION OF NSW

Fifth Respondent

AUSTRALIAN FEDERATION OF

CONSTRUCTION CONTRACTORS

Sixth Respondent

JOHN CUNNINGHAM

Seventh Respondent

MULTIPLEX CONSTRUCTIONS PTY

LIMITED

Cross-Respondent

CORM:	FOSTER J
DATE :	10 AUGUST 1993
PLACE :	SYDNEY

REASONS FOR JUDGMENT

(Extempore)

IIIS HONOUR:  The applicant has sought to tender five

documents. Objection to the tender has been taken by all respondents. The documents are tendered on the issue of damages.

Before considering the objections it is necessary to refer briefly to background matters which have been referred to in argument. It is necessary to refer briefly to the further amended summons of 23 June 1993. This is not a document contemplated specifically by the rules of this Court. It appears to play a role in this case mainly because the proceedings were originally commenced in the Supreme Court of this state and were then transferred to this Court.

The further amended summons indicates the claims made by the present applicant. So far as relevant to the matters I am now considering, there is a claim for:

"1. An Order directing entry of judgment in favour of the Plaintiff against the Defendants for the sum of $3,000,000.00.

. . .

. . .

5. Damages.

6. Interest. "

In this document, which stands as a statement of claim in these proceedings, the applicant makes the claim that it suffered loss and damage. It provided the following particulars of such loss and damage in more than one part of the claim. The particulars are as follows:

country", I am satisfied that where the expression "a law of Australia" is used in s 7C(3) (b) it is intended to cover legislation not only of the Commonwealth Parliament but also of the states of Australia.

I am satisfied that the proceedings of the Royal Commission into Productivity in the Building Industry were relevantly a proceeding authorised by a law of Australia.

I therefore come to consider whether the statements sought to be admitted into evidence in the correspondence which has been tendered were relevantly "made or obtained for the purpose of, or in contemplation of" the proceedings of the Royal Commission. This section is wider in its terms than what might be described as corresponding sections in the Evidence Acts of the various states of Australia.

Counsel have not been able to direct my attention to

any previous case which has construed the meaning of this

phrase. I feel that I can do no more than give to the words

their obvious ordinary meaning even if, perhaps, that obvious and ordinary meaning takes the content of the phrase beyond what might have been contemplated by the Parliament.

A reading of this correspondence, which broadly relates to the obtaining of a statement from Mr Woollard for the use of those conducting the Royal Commission, seems quite clearly, in my view, to indicate that the correspondence and

"Amount by which the tender price as adjusted between the Plaintiff, Ibrox and Girvan was inflated ($3,000,000); alternatively, had the existence of the agreements, alternatively arrangements or understandings, been disclosed to the Plaintiff, the Plaintiff would not have accepted the tender at the price quoted but would have paid Girvan $3,000,000.00 less than it did or would have required the price to be reduced by $3,000,000.00

Further or alternatively the Plaintiff was induced by the said conduct to enter into a contract for the execution of the Project, and to acquire rights thereunder which were of much less value to the Plaintiff than the rice which it aareed to Dav, the - - a .

extent of such dLficiency being the amount of

$3,000,000.00."

These particulars, inter alia, assert that the applicant "would have paid Girvan $3,000,000.00 less than it did". It does not appear from the argument in the matter that any further particulars were sought of this allegation before defences were pleaded. These defences put the applicant's damages in issue.

Discovery was ordered in the proceedings in the

usual way. It appears that no documents were discovered by

the applicant which dealt with inter-company arrangements in	the group of companies to which the applicant belonged
relating to the making of payments on behalf of companies in the group by other companies in the group and the debiting of such payments back.
In view of the way in which payments were made, as now appears, such documents would have been relevant and should have been discovered. However, in response to a
direction that witness statements be filed and served, an affidavit of John Hartigan was filed and served by the applicant more than 12 months ago. Mr Hartigan is a director of the applicant and also a director of the company referred to as IEL in these proceedings which is, apparently, the parent company of the IEL group of companies to which the applicant belongs. He is also the secretary of the group.
His affidavit annexed and exhibited a number of documents. It also contained the statement that "The total amount paid by the Applicant to Girvan referable to the contract works was $27,655,066.00." Some of the documents accompanying this affidavit obviously cast doubt on the literal correctness of this statement. These documents made it appear that the payments were made not by the applicant but by a company in the group, IEL Finance Limited. This quite patent discrepancy did not provoke any complaint about the adequacy of discovery from any of the respondents, nor were any explanations sought of the applicant or its solicitors as
to the method of payment.
It would seem that nothing further occurred until the matter was raised in cross-examination of Mr Hartigan by Mr Hughes of Queen's Counsel. Mr Hartigan readily conceded that the applicant did not itself make the payment referred to but it was made by IEL Finance Limited, the entity which appeared as payer in the documents referred to in his affidavit.
He gave evidence as to the system of payment in the group. He said that payments were made by IEL Finance Limited who then debited the payments to Hargreave Securities Pty Limited, "the parent of the property group", with the payment. Hargreave Securities would then pass this debit onto the relevant construction company, which in this case was the applicant. He could not, however, glve any direct evidence that the system had been followed in the present case as it was not his role to perform or supervise the actual accounting operations of the group.
At the conclusion of his evidence, Mr Hughes of Queen's Counsel made certain statements recorded in the transcript at pages 319, 320. He said:

"In our submission, it is apparent from the course of the cross-examination and re-examination of the last witness... that the applxant's discovery has not been complete. Now, that is the position that we will take up in due course. I wanted it to be made perfectly clear that if there is not further discovery of some of the matters that are dealt with by Mr Hartigan on the level of practice, I shall make the comment in due course in my address, and I thought it appropriate that I should not take the other side by surprise on that."

Mr Hughes' statement was noted in the transcript. The case then proceeded with other evidence.

It is clear that the documents which are now sought to be tendered are tendered for the purpose of showing or going towards showing the following out of the system described by Mr Hartigan in relation to the accounting in the

present case. The documents are tendered under the Evidence Act 1905 (Cth). They have been objected to by all respondents on various grounds. It is submitted that they are not business records. I am satisfied on the basis of an examination of the form and content of the documents that they qualify for this legislative description. I am satisfied that they are business records of the respective companies and organisations referred to in their titles.

It is secondly objected that it is not shown that they have been produced relevantly by qualified persons within the meaning of the legislation. I am satisfied, however, from an examination of the form and content of each of the documents that each prima facie was so produced. They are simply ordinary company accounting records bearing all the indicia of having been produced in the ordinary way from records kept by responsible company employees.

Next, it is said that they contain contradictory therein. If this be so it goes in my view to the weight of	statements as to, in particular, lnterest payments recorded
the documents rather than to their admissibility.
Next, all respondents have joined in a submission that it is unfair to admit these documents and that I should accordingly exercise my discretion under s 7M of the Evidence Act 1905 (Cth) against their admission. Specifically, reliance is placed upon the facts that there had been no previous discovery of the documents or any related documents, also that due to the unavailability of the documents at the time there was no opportunity to cross-examine Mr Hartigan in relation to them.
In this regard, I must bear in mind Mr Hartigan's stated inability to speak as to the specific documents involved in the accounting for payments in this case. It is of course possible that some further cross-examination might have taken place had the documents been available - this cannot possibly be ruled out of question.
Similar submissions were made as to inability to have interrogated on the documents and so forth. As agalnst these submissions, it is put by Mr Spender of Queen's Counsel for the applicant that the documents sought to be tendered were given to the respondent some five days ago when the questions to which the tender is related arose in Mr Hartigan's evidence.
It is also submitted by Mr Spender that it was not reasonably possible to envisage in advance that these particular matters would assume the importance that they have. It is also put that the reference to interest payments in the documents is of no significance as interest is not being claimed by the applicant on the basis of inter-company indebtedness but simply under the Rules of Court.
It is an unfortunate situation which should not have arisen and which has caused me considerable difficulty in decision. I think there is at least some force in the respondent's objections based on unfairness as the genesis of the problem lies in the initial failure to discover documents relating to the issue of payment.
I think, however, as I have already said, that more could have been done in regard to this matter by the respondents after Mr Hartigan's affidavit had been filed. I think that, in the interests of justice in these proceedings, I should deal with the matter by approaching it in a special way. I propose to admit the documents at this stage. However, I bear in mind what has been said as to possible prejudice to the respondents or any one of them, through the admission of the evidence in all the circumstances to which I have made reference.
I bear in mind that the documents are tendered only on the issue of damages. This is a quite discrete issue in these proceedings. Indeed, not only are damages claimed on
the basis of compensation, but exemplary damages are also claimed.
In the circumstances, I have decided that I will reserve to the respondents the right to apply for further discovery and the taking of further evidence should they be so advised before any award of damages is made in the event, of course, that they or any one of them be held liable to the applicant in these proceedings. That application can be made at any time and can be the subject of further directions if and when the application is made.
In the meantime these documents will be admitted as Exhibits AD1 to AD5. In view of the way in which this matter has proceeded to day and the time that has been involved I think the only proper order I can make is to reserve the question of costs in relation to this tender for further submissions if that be desired at a later time and for ultimate decision.

I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment herein of the Honourable Mr Justice M. L. Foster.

Associate:  {'$ :

Date:  10 AUGUST 1993

A P P E A R A N C E S

COUNSEL FORTHE APPLICANT:  MR J.M. SPENDER, QC

with MR D.J. HAMMERSCHLAG

INSTRUCTED BY:  ROSENBLUM & PARTNERS

COUNSEL FOR THE SECOND RESPONDENT: THE HON. T.E.F. HUGHES, QC

w i t h MR R.E. DUBLER

INSTRUCTED BY:  CORRS CHAMBERS WESTGARTH

COUNSEL FOR THE THIRD RESPONDENT: MR J.D. HEYDON, QC

w i t h MR C.P. C O W S

INSTRUCTED BY:  ROBIN MAXAM

COUNSEL FOR THE FOURTH RESPONDENT: MR M.R. ELLICOTT

INSTRUCTED BY:  ADDISONS

COUNSEL FOR THE FIFTH, SIXTH AND SEVENTH RESPONDENTS:

MR J.B. SIMPKINS

INSTRUCTED BY:  COLIN BIGGERS PAISLEY

COUNSEL FOR THE CROSS-RESPONDENT: MR B.W. WALKER

INSTRUCTED BY:	DUNHILL MADDEN BUTLER
DATE OF HEARING:	10 AUGUST 1993
DATE OF JUDGMENT:	10 AUGUST 1993