O'Neil v McNeil

[1995] HCATrans 237

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A20 of 1995

B e t w e e n -

MICHAEL O’NEIL

Applicant

and

KEVIN WAIN McNEIL

Respondent

Application for special leave to appeal

DEANE J
GAUDRON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON MONDAY, 21 AUGUST 1995, AT 3.25 PM

Copyright in the High Court of Australia

MR S. WALSH, QC:   If the Court please, I appear for the applicant.   (instructed by Stratford & Co)

MR P.J. DAY:   May it please the Court, I appear for the respondent.   (instructed by Mellor Olsson)

DEANE J:   Yes, Mr Walsh.

MR WALSH:   If the Court pleases, the issue that is agitated in this application is one of general principle and involves the rule against the reception of hearsay evidence in circumstances where it is intended that the evidence of the out‑of‑court statement is to be evidence of the truth of the statement made.  In the circumstances of this case, the plaintiff, a party to the proceedings, gave evidence of out‑of‑court statements and that was over objection and, presumably, asked the court and the court did, in fact, treat it as evidence of the truth that he had a job, that it was at a certain rate and, furthermore, treated it as the truth of the fact that it would continue for a period of three and a half years up to the date of trial.

The evidence is contained within the application book and I will not take the Court to it unless your Honours wish me to do so, but the effect of the evidence was simply that evidence of a conversation was had, objection was taken, the evidence was admitted.  The trial judge treated the evidence of, as I say, proof of not only that the plaintiff would have been employed but that he would have continued to the date of trial some three and a half years later, and that appears at page 21 at point 1 of the application book where his Honour the learned trial judge concluded in this way, based upon the evidence that:

I am satisfied that the probabilities are that the plaintiff would have become permanently engaged by that company.

Now, what he was speaking of there was the fact that the offer by way of the statement made by a representative of a company had been that, “We will employ you for a certain wage for a week and if you’re up to scratch, we will increase that to a higher wage of $400 per week”.  What his Honour was saying was, “Well, I accept the truth of the fact of the contract, the fact that it would have commenced and furthermore, I accept that, in fact, this would have resulted in him continuing in employment after the period of one week”.  And then his Honour continued that he had an impressive record and so forth.  What his Honour had done, of course, was treated what we say is a hearsay statement ‑ ‑ ‑

McHUGH J:   But it is not a hearsay statement.  I must say, Mr Walsh, I am really puzzled how it can be suggested ‑ it is evidence of the contract and the contract of employment was a relevant fact to be proved.  How else could it be proved otherwise than by proof of what was said?

MR WALSH:   Yes.  Your Honour, it is evidence of the fact that a person unknown, unnamed, purporting to be a representative of a company had, in fact, authority to make a contract ‑ ‑ ‑

McHUGH J:   Now you are getting on to another ground altogether.  It is nothing to do with hearsay; it is a question of authority.

MR WALSH:   Yes, but it is proof only we say, with respect, of the fact that some arrangement or agreement had been entered into with that person.  That is not proof we say, with respect, of the fact that, in addition to that he could have and would have started work on the Monday; that he would have thereafter been paid a wage and, furthermore, that thereafter he would have remained with the company for that period of one and a half years.

McHUGH J:   But once you accept that there was a contract of employment, that he would start on Monday on the 8th, then after that it was a question of whether or not he would have continued, and the judge saw the man and took the view that he would have.

MR WALSH:   If your Honour pleases, the burden of proof was on the plaintiff ‑ ‑ ‑

McHUGH J:   Well, of course.

MR WALSH:   ‑ ‑ ‑and we say, with respect, that what was required was that somebody be called from the company to say “Yes”.  Firstly, the contract would have been performed; secondly, that it would have remained on foot to the date of the trial and, thirdly, that the remuneration would have been X or Y, as the case may be.

McHUGH J:   That does not prevent this evidence being led.  If the plaintiff wanted to leave his case like that with all the risks of criticism that could be made of it - this sort of evidence is given all the time in different contexts.  Take the case of the estate agent suing for his commission.  He gives evidence of the conversation he has with the purchaser, although the vendor is not present, as to prove that he is the effective cause of the sale.  Take the policeman who is prosecuting the publican for suffering betting on his premises; he gives evidence he heard somebody go along and say, “I want $10 on the favourite in the first race in Melbourne” to prove the issue that betting was taking place on the premises.  It is done ‑ ‑ ‑

MR WALSH:   Yes.  It proves the fact at that point of time, but what was done in this case, with respect, your Honour and our main complaint and we say is the matter that ought to give rise to a grant of special leave is that, in effect, that has been then extended to being proof that it would have continued thereafter.  If we have a contract that something will take place on a certain day and that is all that is required, that is one thing.  To say that it is going to be a continuing contract and that work was available thereafter up until the date of trial was to treat as a matter of truth not only that the contract was going to be honoured, but further that it was going to be at a wage of a certain amount and that it would continue up until the date of trial.

DEANE J:   That has been a dazzling display of footwork, but where does it leave your hearsay point?  It seems to have just disappeared.

MR WALSH:   Yes.  If your Honour pleases, the hearsay point only arises if, in fact, you treat everything that was said as being true as opposed to there being a contract with some unknown person.

DEANE J:   Assume that this other person had authority to contract.  Where does it leave your hearsay point?  There is not one.

MR WALSH:   We say, with respect, that the hearsay point becomes the truth.  It is accepting that it is true that not only that he will have a job on Monday, but that it is true that he will continue thereafter at a certain wage and accepting that as being true and then relying further taking that acceptance of the hearsay point in terms of a proof of truth as opposed to the existence of the contract and relying upon that truth to then reach a conclusion that it was perfectly safe to reach a conclusion on the basis of the acceptance of that truth.

DEANE CJ:    Let us concede that it is not perfectly safe - few things are in litigation - I am still at  loss to see the hearsay point.

MR WALSH:   The point is as much a question of burden of proof as it is hearsay and that is why we framed the questions in the way that we did, namely that it is not only the reception of the evidence but also the use of that evidence for a particular purpose that we would be ‑ ‑ ‑

GAUDRON J:   But it was not used in isolation.  There was the plaintiff’s work history and the nature of employment.  Surely the trial judge was free to take account of the fact that employment is usually of some duration.

MR WALSH:   Let us assume that a witness comes along, a plaintiff who is, of course, an interested party.  It is not the case of a third party relating such a conversation but an interested party comes along and says, “I had a conversation with a person who I now can’t remember and I’ve been offered a job at $5,000 per week in a remote area in Malaysia”, and he says ‑ ‑ ‑

DEANE J:   It would not be much evidence.  Let us assume he comes along and says, “I had a conversation with the personnel manager at David Jones and he said, `Right, you’re just what we’ve been looking for; you can start tomorrow and if you’d like a written contract, I’ll sign it for you on the spot’.”  Do you say that was hearsay?

MR WALSH:   We say, with respect, that a component of it is, in fact, hearsay.  The only reason this evidence often gets before the courts, we say with respect, is because objection is not taken.  On some occasions ‑ they might be rare ‑ objection is taken and no doubt for good reason because it may be, for example, that there is not confidence in the assertion that has been made.  But the fact remains, one way or the other, it is an assertion out of court that, in fact, relies upon the truth of what is being said in order for it to be probative.

McHUGH J:   I do not think truth has anything to do with this point.  It is a question of what the contractual obligations were between the plaintiff and the company and on his version, if he was accepted, he had a contract under which he was going to get $400 a week with a commission or bonus basis as well as a wage.

MR WALSH:   It has the following dangers, we say ‑ ‑ ‑

McHUGH J:   It may have plenty of dangers and a trial judge might be very sceptical of this evidence if you do not call the personnel manager to corroborate it, but there it is.

MR WALSH:   But it has the effect, we say, of, in a sense, shifting the evidentiary burden where that is not justified upon the defendant.  For example, if in fact in my case, the contract in Malaysia, a plaintiff chooses not to call any evidence, as indeed was not done in this case, the defendant then is left to try and, in effect, show that, no, that is not correct that, in fact, such a contract would never have been fulfilled, for example.

McHUGH J:   But that sort of thing happens all the time.  It might be in writing.  The plaintiff gets in the witness‑box and he has a document purporting to be signed on behalf of the XY company in Malaysia and a copy of his acceptance of the offer and that is it.  It gets in as a written contract of the employment.  The defendant is still in the same evidentiary difficulties.

MR WALSH:   The second limb to the argument, we say, is then acting upon a contract, or evidence of a contract as if it would have just continued up until the date of trial.  Clearly the plaintiff could have called some evidence of the fact that that may be so.  There was no suggestion whatsoever that the plaintiff could not call that evidence.

McHUGH J:   It does not sound like a special leave point, this second point, Mr Walsh.

MR WALSH:   It is a special leave point to this extent, that the courts below will follow a decision of the Court of Appeal of South Australia which, in effect, encourages parties to come to the court and simply assert by way of statements that they had a conversation with someone and that is the end of the matter.  In circumstances ‑ ‑ ‑

McHUGH J:   It is still a matter for particulars, is it not, and interrogatories and whatever else the procedure is?

MR WALSH:   But let us assume the particulars did not satisfy anybody who might seek to inquire in a case such as this and let us assume even that inquiry was made and that it did not satisfy the inquirer that there was, in fact, such a job and then the plaintiff was put to proof, proving the loss.  After all, what is in question at the end of the day is loss of earning capacity; loss of earning capacity in terms that it is productive of financial loss.  Hence to show naturally, the burden being on the plaintiff, that he would have been in employment for three and a half years up until the date of trial was a critical issue.  What the trial judge has done, we say with the greatest respect, is to treat as a matter of fact something which ought not to be assumed on the basis of simply an assertion made in a conversation had with a person ‑ ‑ ‑

GAUDRON J:   Is it not an inference from that fact and other facts in evidence and it is not simply a treatment of it from that simple statement of evidence?

MR WALSH:   Yes, but can I put this to your Honour?  I understand the point that your Honour makes but, with respect, that is all information that occurred beforehand.  Let us assume this scenario, that the plaintiff gave evidence that that is what the conversation was and then he called someone from the company and the person who he spoke to was not there but they had some records.  The records might be admissible under the Evidence Act, they may not, but the records might be received as evidence of the fact that they were made and an inference might then be drawn to justify the conclusion that the plaintiff wishes the court to make. 

But left in isolation, as it were, in the present case, it is an encouragement or an inducement to parties to simply assert a conversation.  It may be ‑ I accept what your Honour puts to me, that in a particular case there were good signs beforehand which might suggest one thing or another.  But the fact remains that it is only a contract with an unnamed person at the very best; that something might occur on the Monday.  It may or may not occur. 

So we say that, in effect, the seriousness of the issue that we raise is the effect that it is going to have upon other cases.  If the Court pleases, not only did the learned trial judge treat the evidence of simply a conversation with a representative as truth of what was being said in the ultimate sense that I have put, but he even went so far as to say ‑ and I do not take your Honours to it ‑ that it was evidence that it was the employment officer.  There was no evidence of that.  He went further and said that this man was to be appointed a factory manager.  There was no evidence of that; he was going to be a supervisor and that is all.

What we say, with respect, is that it is elevating a conversation to proof of that which must be proven, namely the burden of proof being on the plaintiff, loss of earning capacity for the past.  Looked at in that light and then looking at the hearsay component, if I may call it that, certainly it is evidence of a contract but that is not the ultimate question.  The ultimate question, and what is relevant, is not that someone said he had a job and that there might have been some binding contract with a person if he did have authority, but that, in fact, he would have worked at that job up until the date of trial.

If the Court pleases, we say, therefore, that the challenge seeks to agitate not only the reception of evidence to the extent that it is to be treated as proof of all the things that the learned trial judge treated it as, but that it raises the issue of the use of that evidence in the context of the burden of proof on the plaintiff.  Numerous examples might be given, I suppose, of the dangers of accepting evidence of that kind.  I need not say any more than the one about Malaysia but it could be that issues of this kind will arise not just in cases where loss of earning capacity is the loss, it could be a loss of a capital asset; it could be a misrepresentation case; it could be any case where damages are claimed and a conversation is asserted by somebody and nothing more, no explanation given.  Some of the cases in the criminal arena speak of a person being deceased and, therefore, of course, I think in Pollitt’s Case, a person not being able to give the evidence.  So the best evidence available is the evidence of the person who heard something said.  In this case, there is no suggestion that proper evidence could not have been called, and that is the danger.  It is an encouragement to people, in a sense, to invent a story, to make an assertion that cannot be contradicted.

We say, therefore, in conclusion that there was little probative weight to be given simply to the assertion of the contract in the context of the case.  We say that the matter is of such importance not only to this defendant but no doubt to other defendants and those that lie behind them in having to meet judgments and because it is going to arise in so many cases, that we would accept, if the Court was prepared to grant special leave, that it be on terms as to costs.  The issue of this case is not the issue; it is subsequent cases that are the issue from the point of view of the defendant or the insurer behind the defendant in this case.

The dangers, in conclusion, firstly arise from the fact that the plaintiff has an interest.  The burden of proof, after all, is on the plaintiff but has been met by a conversation that has not been tested; no chance of cross‑examination; it is easy to fabricate.  I stress that it was an unknown person that allegedly the conversation took place with.  There cannot, we say, be evidence of any continued existence of the job and for those reasons it is not safe to simply accept the evidence and then assess the damages as if it was, in fact, true.  If the Court pleases, they are the submissions.

DEANE J:   Thank you, Mr Walsh.    The Court need not trouble you, Mr Day.

The Court considers than an appeal in this case would turn upon its own particular facts and would not involve any question of general principle appropriate to attract the grant of special leave to appeal.  Accordingly the application for special leave to appeal is refused.

MR DAY:   I apply for costs, if your Honour pleases.

MR WALSH:   I cannot resist that, your Honour.

DEANE J:   The application is refused with costs.

AT 3.43 PM THE MATTER WAS CONCLUDED