Project 28 Pty Ltd v Barr

[2007] NSWSC 715

Reported Decision: 64 ACSR 620

New South Wales

Supreme Court

CITATION:	Project 28 Pty Ltd v Barr & Ors [2007] NSWSC 715
HEARING DATE(S):	13/06/07
JUDGMENT DATE :	4 July 2007
JUDGMENT OF:	Gzell J
DECISION:	Corporate defendant to serve witness statements except where a witness claims privilege against self-incrimination when witness statement to be served after close of plaintiff's case if witness is to give evidence.
CATCHWORDS:	EVIDENCE - Witnesses - Allegation of provision of secret commission by corporate defendant - Registrar ordered it to serve witness statements - On review, Associate Justice ordered the statements to be served only after close of plaintiff's case - Privilige against self-incrimination not open to corporations - Whether Associate Justice in error
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005 Corporations Act 2001 (Cth) Trade Practices Act 1974 (Cth) Crimes Act 1900 Evidence Act 1995
CASES CITED:	Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 Sorby v The Commonwealth (1983) 152 CLR 281 Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 Environment Protection Authority v Caltex Refining Co Pty Ltd (1992-1993) 178 CLR 477 Australian Competition and Consumer Commission v FFE Building Services Ltd (2003) 130 FCR 37 The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 Australian Securities and Investments Commission v ABC Fund Managers Ltd [2001] VSC 92 Construction, Forestry, Mining and Energy Union of Australia v Alfred (2004) 135 FCR 459 Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96
PARTIES:	Project 28 Pty Ltd - Plaintiff Timothy James Barr - First Defendant Barr Project Management Pty Ltd - Second Defendant Richtech Pty Ltd - Third Defendant
FILE NUMBER(S):	SC 6413/04
COUNSEL:	Mr R Dubler SC - Plaintiff Mr J Lazarus - First and Second Defendants Mr J West QC/ Mr L Bowden - Third Defendant
SOLICITORS:	Verekers Lawyers - Plaintiff Corrs Chambers Westgarth Lawyers - First and Second Defendants Creswicks Lawyers - David Beattie Pty Ltd Solicitor (Agents) - Third Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 4 JULY 2007

6413/04 PROJECT 28 PTY LTD v TIMOTHY JAMES BARR & ORS

JUDGMENT

1 Senior Deputy Registrar Wearne made orders that the evidence of lay witnesses to be called by the defendants at trial be taken orally and the defendants serve statements of lay witnesses by a specified date. The third defendant, Richtech Pty Ltd, sought a review of the second order. Upon review, McLaughlin AsJ, in an ex tempore judgment, set aside that order and ordered in its stead that before any lay witness was called to give evidence in Richtech’s case, a statement by its solicitors be served upon the plaintiff and the first and second defendants, such statement to set forth the nature of the evidence that the solicitors understood would be given by the lay witness. The plaintiff, Project 28 Pty Ltd, appeals to this Court from that order.

2 On appeal from the decision of an Associate Justice, oral evidence may be adduced with the leave of the Court under the Uniform Civil Procedure Rules 2005, r 49.12. If an Appellate Court can receive further evidence, and its powers are not restricted to making the decision that should have been made at first instance, the appeal is usually and conveniently described as an appeal by way of rehearing. And if there be no further evidence admitted, the Court entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was error on the part of the primary decision maker (Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [13]).

3 It follows that it is not for me to substitute the decision I think should have been made by McLaughlin AsJ. I may exercise appellate powers only if satisfied that there was error on his Honour’s part.

4 The second defendant, Barr Project Management Pty Ltd, was engaged by Project 28 as a construction manager and, subsequently, as project manager for a proposed development of Kings Forest as a tourist destination, resort and golf complex. Timothy James Barr, the first defendant, was a director, shareholder and principal of Barr Project Management.

5 In the further amended statement of claim it is alleged that Project 28 was a non-resident company that relied upon Mr Barr or Barr Project Management to be kept informed of matters affecting the management of Kings Forest and to advise it regarding the management, promotion and development of Kings Forest.

6 Project 28 purchased land near Kings Forest for $10.05 million. It subsequently resolved to attempt to sell that land. The pleading alleges that Richtech, without full knowledge or consent of Project 28, agreed to transfer land at Kingscliff to Mr Barr with a view to influencing Mr Barr and Barr Project Management to act in favour of Richtech in respect of the sale the land of Project 28. The pleading alleges that Barr and Barr Project Management recommended to Project 28 that the land be sold to Richtech for $2.205 million. Project 28 did so. It is alleged that Mr Barr subsequently sold the Kingscliff land for $0.31 million. It is alleged that the Project 28 land was sold to Richtech at an under value.

7 What is pleaded is the provision by Richtech of a secret commission to Mr Barr. The same facts ground allegations of a breach of an implied term of the retainer of Barr Project Management, of breach of fiduciary duties owed to Project 28, of a breach of statutory duties under the Corporations Act 2001 (Cth), of misleading or deceptive conduct under the Trade Practices Act 1974 (Cth) and of negligence.

8 McLaughlin AsJ took the view that there competing principles involved. Project 28 should not be confronted, suddenly, by a witness whose evidence would constitute what, formerly, used to be referred to as trial by ambush. It should be given some forewarning of the nature of the evidence that is to be called by Richtech. On the other hand, where serious allegations of criminal conduct are made, the giving of a secret commission, Richtech should not be required to disclose its evidence before the totality of the case against it is presented by the plaintiff and the plaintiff’s case is closed.

9 His Honour weighed these principles and concluded in favour of relieving Richtech from the second order of the Senior Deputy Registrar. His Honour was aware that the practical consequence of his order was likely to be that an application for an adjournment, during the course of the trial, would be made.

10 The orders were made by Senior Deputy Registrar Wearne by consent of the parties. McLaughlin AsJ referred to this fact and to the submission by Project 28 that the consent order ought not to be disturbed. His Honour noted, however, that Project 28 had not pointed to any prejudice that could not be cured by an appropriate order as to costs.

11 The Crimes Act 1900, s 249B(2) provides, relevantly for present purposes, that if any person corruptly gives to any agent any benefit: as an inducement or reward for the agent’s doing something, or showing favour to any person, in relation to the affairs or business of the agent’s principal, or the receipt of which would in any way tend to influence the agent to show favour to any person in relation to the affairs or business of the agent’s principal, the first mentioned person is liable to imprisonment for seven years.

12 A witness is not compelled to answer questions that may show that the witness has committed a crime with which the witness may be charged and the answers may place the witness in real and appreciable danger of conviction (Sorby v The Commonwealth (1983) 152 CLR 281 at 294, Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 at 420-424).

13 The privilege against self-incrimination is deeply ingrained in the common law and is subject to a presumption against its abrogation. It is not abrogated by statute except in the clearest terms (Sorby at 289, 309-310, 316, 347).

14 But as McLaughlin AsJ recognised, the privilege against self-incrimination does not apply to corporations (Environment Protection Authority v Caltex Refining Co Pty Ltd (1992-1993) 178 CLR 477 at 507-508, 516, 556).

15 It was submitted that Richtech is not at risk of prosecution and it is mere speculation that one or more of its lay witnesses might be exposed to the risk of self-incrimination.

16 In Richtech’s behalf, reference was made to Australian Competition and Consumer Commission v FFE Building Services Ltd (2003) 130 FCR 37. In that case the appellant instituted proceedings including recovery of pecuniary penalties under Trade Practice Act 1974 (Cth) against individual and corporate respondents. The respondents denied the alleged contraventions. They were not crimes. The Commission applied for orders that the respondents file and serve statements of the evidence proposed to be given by witnesses before the close of the Commission’s case. The Commission offered an undertaking that the statements would not be tendered in the Commission’s case in chief, nor used to support an argument that the respondents had a case to answer. It was held that requiring the respondents to file the statements before the close of the Commission’s case was inconsistent with the privilege against exposure to penalties.

17 It was submitted on behalf of Project 28 that the decision is distinguishable. First, the orders were not resisted by the corporate respondents and, secondly, the privilege against exposure to penalties is different from privilege against self-incrimination.

18 As noted in FFE at 39 [6], the Commission was directed to file and serve statements of evidence of all its proposed witnesses and it was accepted by all parties that it would be appropriate for the Court to make a similar direction in respect of the witnesses proposed to be called on behalf of the corporate respondents.

19 That concession does not mean, however, that the decision stands as authority against a corporation not being required to file witness statements until the close of a plaintiff’s case.

20 The privilege against exposure to penalties is one of a triumvirate of privileges that have some similarity with the privilege against self-incrimination, the other two being the privilege against exposure to forfeitures and the privilege against exposure to ecclesiastical essential (The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553-554 [13]).

21 This appeal does not involve the privilege against exposure to penalties. It involves the more fundamental privilege against self-incrimination.

22 During the course of the hearing, I raised with counsel the possibility of varying the order of McLaughlin AsJ to restrict it to those witnesses who claimed the privilege. But it was submitted by counsel for Richtech that the whole case against it is the giving of a secret commission. That is the only issue upon which evidence could be called from lay witnesses and there is a serious risk to those lay witnesses that they might be in jeopardy of self-incrimination.

23 The case for retention of the order of McLaughlin AsJ was not based upon Richtech claiming the privilege. Its concern is that, if it seeks to call evidence, its witnesses should not be compromised from relying upon their rights to protection against self-incrimination. A corporation can only act through individuals and those individuals may claim the privilege against self-incrimination.

24 The Evidence Act 1995, s 128 enables the court to grant a certificate preventing evidence, that the court is satisfied might tend to prove that the witness has committed an offence, being used against the person in any proceeding in a New South Wales court. If a witness statement is required to be given to Project 28 before the completion of its case against Richtech, there is the danger that the witness will have waived the privilege.

25 But these arguments can be raised by any corporation required to provide witness statements. The argument that the order of McLaughlin AsJ is in aid of the individuals through whom Richtech operates is open to any corporation as is the consequence of the risk of waiver of the privilege by a lay witness. If I were to accede to the arguments the decision of the majority of the High Court in Caltex would be reversed in effect.

26 The way in which a corporation acts through individuals was not lost on the majority in Caltex. At 514-515, Brennan J discussed the concept that criminal liability can be sheeted home to a corporation only upon proof that what is done, or omitted to be done, and the mental state with which the act was done, or the omission was made, are within the scope of the authority conferred by corporation upon the person or persons on whose act, omission or state of mind the corporation’s criminal liability is said to depend. And McHugh J, at 548, discussed the proposition that it was arguable that the privilege should extend to corporations so as to protect the human rights of individuals who represent them in curial proceedings.

27 In Australian Securities and Investments Commission v ABC Fund Managers Ltd [2001] VSC 92, Warren J as she then was, rejected a claim to privilege against self-incrimination on behalf of an unrepresented defendant by a corporate defendant. Her Honour took the view that the individual should claim the privilege and in the absence of such a claim the individual’s evidence should be filed in affidavit form in the usual way.

28 In Construction, Forestry, Miningand Energy Union of Australia v Alfred (2004) 135 FCR 459 at 465, Marshall J dismissed a submission that the union should not be compelled to file a defence. The submission was founded on the proposition that the privilege against exposure to penalties of the personal respondents would be abrogated by requiring the union to provide evidence that might be used against the personal respondents. His Honour referred to Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 116, where Burchett J pointed out that an individual’s privilege against self-incrimination has never been, nor should it be, a shield against use of incriminating evidence – only a right to decline to be themselves the authors of their own destruction by producing the evidence.

29 In my view, McLaughlin AsJ erred in making the order he did. It circumvented the decision of the majority of the High Court in Caltex. It was wrong in principle. The appropriate order is for the delivery by Richtech of witness statements by a specified date, except in the case of any witness who claims privilege against self-incrimination. In that case a witness statement should only be provided to Project 28 at the close of its case against Richtech, if it proposed that such a witness will give evidence on Richtech’s behalf.

30 I will hear the parties on the appropriate terms of such orders and I will hear the parties on costs. I direct the parties to bring in short minutes of order reflecting these reasons.

**********