Osborne Metal Industries v Bullock (No.2)
[2011] NSWSC 637
•23 June 2011
Supreme Court
New South Wales
Medium Neutral Citation: Osborne Metal Industries v Bullock (No.2) [2011] NSWSC 637 Hearing dates: 20/06/2011, 21/06/2011, 22/06/2011, 23/06/2011 and 24/06/2011 Decision date: 23 June 2011 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Tender rejected
Catchwords: EVIDENCE - Admissibility - discretion to exclude or limit the use of evidence - probative value of evidence - prejudicial nature of evidence. Legislation Cited: Evidence Act 1995 (NSW) Category: Procedural and other rulings Parties: Osborne Metal Industries (NSW) Pty Ltd ACN 003 284 928 (First Plaintiff)
Brooker Holdings Pty Limited ACN 003 912 258 (Second Plaintiff)
Bullock MFG Pty Ltd ACN 001 199 677 (First Defendant)
Roy James Jackson (Second Defendant)
Rodney John Jackson (Third Defendant)Representation: D B Studdy SC / J H Stephenson (Plaintiffs)
F C Corsaro SC / J J Young (Defendants)
Watson Mangioni Lawyers Pty Limited (Plaintiffs)
Bundock / Palmer Lawyers (Defendants)
File Number(s): 2009/298671
Judgment - ON ADMISSIBILITY OF EVIDENCE
HIS HONOUR: Mr Studdy of Senior Counsel, for the plaintiffs, cross-examined Mr Roy Jackson as to, among other things, the income tax return of the first defendant, (Bullock) for the year ended 30 June 2005.
The point of the cross-examination was to show that Mr Stephen Willingale was named as the tax agent who had prepared the returns for Bullock, and that Bullock's public officer was Mr Roy Jackson (Mr Jackson).
Mr Corsaro of Senior Counsel, for the defendants, established from Mr Jackson that the income tax returns had been based on Bullock's financial statements for the year ended 30 June 2005, which documents Mr Jackson identified.
Mr Corsaro also put to Mr Jackson a document appearing to be a copy of extracts from the general journal of both the first plaintiff (Osborne) and Bullock, showing among other things an adjustment in round figures of $562,530.00 That is said to be "entry to reflect receipts and payments in Bullock MFG OMI loan account".
That amount (rounded up) is reflected as an extraordinary item in Bullock's profit and loss account for the year ended 30 June 2005.
Mr Studdy does not object to the tender of the financial statements, but does object to the tender of the extracts from the general journals showing the derivation of the amount of $562,530.00 shown in the profit and loss account. Mr Corsaro wishes to suggest that the general journal is admissible to show that, at an earlier stage, the accounts were prepared on a basis that reflected an agreement of the kind that his clients allege in relation to Bullock's entitlement to keep for its own benefit what I have called in an earlier judgment on admissibility the net receivables of OMI for the year ended 30 June 2004.
It may be noted that the amount of the net receivables to which I have just referred has been agreed to be $574,592.00: an amount different, although perhaps not markedly, to the extraordinary item shown in Bullock's profit and loss account as at 30 June 2005. No explanation of the discrepancy is offered, no doubt in part due to the fact that Mr Willingale has not been called to prove the document or to explain what it was that he was intending to do.
Mr Studdy submitted (and Mr Corsaro did not suggest that the submission was factually incorrect) that the extract from the general journal (document) had been discovered relatively late. Mr Studdy SC also submitted, and it is certainly the case, that the document was not referred to in any evidence, either in chief or in reply, given by Mr Jackson by affidavit.
There seems to be little doubt that the document is a business record for the purposes of s 69 of the Evidence Act 1995 (NSW). Hence, by virtue of s 69(2), the hearsay rule (see s 59 of the Evidence Act ) does not apply to the document insofar as it contains any representation made by a person who might have had or be supposed to have had knowledge of the asserted fact or to have been supplied with information as to it by someone who did.
In the circumstances in which the document came to light in the course of evidence, it is by no means clear what was the source of Mr Willingale's information that the entry to which I have referred reflects receipts and payments in the loan account maintained between Bullock and Osborne. However, since the point was not addressed in argument, it does not seem appropriate to decide that the document is not, contrary to what might be thought, admissible to prove the truth of the relevant representation because of the matter to which I have referred.
However, the fact that the source of Mr Willingale's understanding, and hence of the basis on which he made the adjustments, is not disclosed does not cease to be relevant. On the contrary, it is something which is directly relevant to the evidentiary value - the weight - of the document. In circumstances where Mr Willingale has not been called to explain why he did what he did, as shown in the document, and in circumstances where the plaintiffs have been denied any opportunity to test the validity of what Mr Willingale did, I think that to admit the document into evidence as proof of the matters asserted in it, or as capable of proving those matters, would be to do a grave injustice to the plaintiffs on what is a significant aspect of their case against the defendants.
Accordingly, even if the document is otherwise admissible (and I am content to proceed on the basis that, notwithstanding the doubts I have expressed, it is) I reject it pursuant to s 135 of the Evidence Act .
If it is sought to tender the document on some other basis, which does not involve its standing as capable of proving the asserted fact to which I have pointed, then I would be prepared to consider admitting it. However it is difficult to see what real value the document would have in those circumstances.
The document will remain as marked for identification 3. The financial statements to which I have referred are also tendered. There is no objection to their tender. Accordingly, the documents formerly marked for identification 4 will be admitted as Exhibit DX10.
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Decision last updated: 25 July 2011
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