Re Idylic Solutions Pty Ltd
[2012] NSWSC 568
•25 May 2012
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Idylic Solutions Pty Ltd & ors - Australian Securities and Investments Commission v Hobbs [2012] NSWSC 568 Hearing dates: 11 and 17 April, and 16 May 2012 Decision date: 25 May 2012 Jurisdiction: Equity Division Before: Ward J Decision: Leave granted pursuant to s 50 Evidence Act to adduce summaries as evidence of contents of documents (with exception of parts of the summaries properly to be characterised as submissions)
Catchwords: EVIDENCE - s 50 Evidence Act 1995 (NSW) - whether evidence summarising voluminous or complex underlying documents could be adduced as "summaries" pursuant to s 50 - whether a document prepared through a process that involved the exercise of judgment or the application of a calculation is a "summary" - whether document summarising other summary documents is a "summary" - whether a conclusion based on underlying documents is a summary - HELD - document prepared through simple application of arithmetical formula is a "summary" - document prepared involving the exercise of judgment or opinion is not a "summary" - document summarising other summary documents is a "summary" - evidence containing conclusions are not "summaries" but are to be treated as submissions Legislation Cited: Evidence Act 1995 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: Beattie & Sutherland v Osman (No 3) [2009] NSWSC 824
Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding [2004] NSWSC 768
Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144Texts Cited: Macquarie Dictionary (online)
S Odgers, Uniform Evidence Law (9th ed, 2010)Category: Interlocutory applications Parties: Australian Securities and Investments Commission (Plaintiff)
David John Hobbs (First Defendant)
Min Hua Li (Second Defendant)
David John Collard (Third Defendant)
Hui Min Wu (Fourth Defendant)
Con Koutsoukos (Fifth Defendant)
Brian John Wood (Sixth Defendant)
Jimmy Truong (Seventh Defendant)
Jacqueline Hobbs (Eighth Defendant)
Idylic Solutions Pty Ltd ACN 121 960 754 (Ninth Defendant)
888 Management Inc (Tenth Defendant)
Geneva Financial Ltd (Eleventh Defendant)
Barclaywest Ltd (Twelfth Defendant)
Preserved Investment Group Ltd (Thirteenth Defendant)
North Wave Ltd (Fourteenth Defendant)
G P Global Ltd (Fifteenth Defendant)Representation: Counsel:
J R Clarke (Plaintiff)
M Southwick (First, Eighth & Eleventh Defendants – 11 and 17 April 2012)
Solicitors:
Georgina Hayden, Solicitor for Australian Securities and Investments Commission (Plaintiff)
Prime Lawyers (Fifth, Eighth & Eleventh Defendants)
File Number(s): 07/258119
Judgment
HER HONOUR: By notice of motion filed on 2 April 2012, ASIC sought various orders in relation to the conduct of these proceedings, the hearing of which has been listed before me to commence on 20 June 2012 for 8 weeks. The applications brought under that notice of motion fell broadly into three classes: an application for leave to adduce as evidence transcripts of examinations conducted in the United States of America in January 2010 of a Ms Reisinger, who is resident in that country (which application I heard and dealt with on 17 April 2012); an application for leave to issue subpoenas to nine New Zealand residents (which I dealt with, other than in respect of one such witness, on 11 April 2012 and in respect of the remaining witness on 16 May 2012); and an application for leave pursuant to s 50 of the Evidence Act 1995 (NSW) for ASIC to adduce, as evidence of the contents of over 6,000 documents, a number of summaries that have been prepared either by a senior investigator of ASIC in its Financial Economy - Deterrence Team, Mr Peter Connor, or by a chartered accountant and registered liquidator (who was appointed as liquidator of two of the schemes the subject of the present proceedings - the Super Save Superannuation Fund and the Integrity Plus Unit Trust - on 20 June 2008 and still remains the liquidator of one of those schemes), Mr Barry Taylor. (In each case the documents sought to be adduced as summaries under s 50 were prepared with the assistance of staff under the supervision of Mr Connor or Mr Taylor respectively).
Having read the evidence relied upon by ASIC and the evidence filed in April this year by the Hobbs interests in relation to the s 50 application, and having heard submissions in relation thereto both prior to and on 16 May 2012, I reserved my judgment on ASIC's s 50 application. I now publish my reasons on that application.
Introduction
In support of its s 50 application, ASIC relies on an affidavit sworn on 2 April 2012 by Ms Meredith Florence Dodds, the solicitor who, under the supervision of ASIC's Special Counsel, Litigation, has responsibility for the planning and conduct of these proceedings. Exhibited to Ms Dodds' affidavit were copies of affidavits sworn 30 March 2012 by each of Mr Connor and Mr Taylor together with the exhibits to their respective affidavits. Further affidavits sworn by Mr Connor on 11 April 2012 and 14 May 2012 have also been filed in support of the s 50 application.
On the return date of the notice of motion on 11 April 2012, Mr M Southwick of Counsel appeared for the first, eighth and eleventh defendants (the Hobbs interests) and filed in Court a Notice of Appearance on their behalf, signed by a solicitor with the firm Prime Lawyers. (There was on that occasion also an appearance by Mr A Hartnell, solicitor, on behalf of Mr Collard (the third defendant), although Mr Hartnell made it clear that he was instructed to appear only on the return of the notice of motion and Mr Collard has since filed a submitting appearance except as to costs in relation to the proceedings.)
On that date Mr Southwick sought, and I granted, a short adjournment of the s 50 application on the basis that (although having been briefed in the matter some time previously) he had only recently received a fresh brief to act in the matter and had not had an opportunity to review all the material in relation to the Notice of Motion. In particular, he indicated that there had been a difficulty with receipt by the Hobbs interests of the exhibits to the relevant affidavits by email or otherwise.
There was an objection foreshadowed to the admission of the summaries sought to be tendered as evidence on the basis of the lateness of service of the affidavits in relation thereto; the lack of a reasonable opportunity to examine the documents; and (at least in relation to the summaries exhibited to Mr Taylor's affidavit) on the basis of a concern that these were not summaries for the purposes of s 50, in that they involved an exercise of judgment on the part of Mr Taylor (and that the application to adduce the summaries prepared by him as evidence was under s 50 an attempt to adduce expert evidence without leave).
Mr Southwick filed in Court on that occasion an affidavit sworn by the solicitor with the then conduct of these proceedings on behalf of the Hobbs interests (Mr Eric Saad), who has deposed to the receipt by his firm of instructions to act in this matter on 5 April after an enquiry made of the firm on 27 March 2012. Mr Saad deposed that his clients had been served with the affidavits of Mr Taylor and Mr Connor on 31 March 2012 but not with the exhibits to those affidavits; had been served on 2 April with a letter in relation to the present notice of motion and the affidavit of Ms Dodds, but not the exhibits thereto; and that, as at 11 April, the position was that he did not have the exhibits to either Mr Taylor's affidavit or that of Mr Connor. Annexed to his affidavit were copies of emails from ASIC indicating that the exhibits were to be sent to Mr Hobbs by courier. (On 16 May 2012, Counsel for ASIC, Mr Clarke, informed me that, although attempts had been made by a courier to effect service of the hard copy exhibits on 2, 3 and 5 April 2012, those attempts had been unsuccessful and a message had been left for Mr Hobbs explaining that the documents were available for collection from the courier company.)
As I understand it, therefore, although certain of the material sought to be relied upon in relation to the s 50 application had been served by email as at 5 April 2012, Mr Hobbs did not physically receive the hard copy exhibits until some time after that date. However, service of the documents had occurred at the latest by 11 April, since Mr Southwick informed me on that date that he had received the hard copy documents from ASIC variously on 10 and 11 April 2012.
As indicated above, I stood that part of the Notice of Motion relating to the s 50 application (as well as other unrelated parts of the Notice of Motion) over to 17 April 2012. On that occasion, Mr Southwick again appeared for the Hobbs interests, instructed by Prime Lawyers, and a further affidavit sworn by Mr Saad was read (it having been served that morning on ASIC, only shortly before 10am). ASIC then sought an adjournment of the s 50 application in order to deal with various of the matters raised in that affidavit (in particular, assertions made by Mr Saad as to the incorrectness of information in the spreadsheets/schedules given his inability to source, in the spreadsheets/schedules, certain of the entries appearing in the underlying documents).
Mr Southwick made various oral submissions in relation to the position taken by the Hobbs interests at that stage in respect of the s 50 application. I then stood that part of the Notice of Motion over to 16 May 2012 for hearing and made certain directions as to the notification by the Hobbs interests of ASIC any further objection in relation to the content of the summaries and then as to the filing of any further evidence by them and by ASIC in reply.
By the time the matter returned on 16 May (indeed very shortly after the interlocutory hearing on 17 April 2012), an issue arose as to the representation of the Hobbs interests by Prime Lawyers (due, according to Mr Saad, to Mr Hobbs' failure to meet a deadline for the payment of certain fees). On 26 April 2012, a Notice of Intention to Cease to Act was served by Prime Lawyers on the Hobbs interests and, though not in compliance with the relevant provisions under the Uniform Civil Procedure Rules, a Notice of Ceasing to Act was filed in the Court Registry on 3 May 2012. This did not come to my attention until the week commencing 14 May 2012. When it did, I directed, through my tipstaff, that there be an attendance in court by a representative from Prime Lawyers on the date that had been fixed for the hearing of the balance of ASIC's Notice of Motion (on 16 May 2012). At that time, a formal application for leave to withdraw was made by Mr Saad. (There was no appearance by Mr Southwick on that occasion.)
In due course I gave leave to Mr Saad's firm to withdraw as solicitors on the record for the Hobbs interests (but such leave was to take effect only after, which has since occurred, they reported to the Hobbs interests as to the outcome of the proceedings on 16 May 2012). I imposed that condition on the grant of leave as I wished to ensure that, as a matter of procedural fairness, the Hobbs interests were fully informed as to the interlocutory steps that were taken in the proceedings on 16 May 2012.
I should also add that in the period between 17 April 2012 and 16 May 2012 (during most of which time my staff were not in chambers) a number of communications were sent, addressed to me, from various persons (including Mr Hobbs and his wife), in relation to this matter (including affidavits as well as an application by Mr Hobbs to vacate a hearing identified by him as to be on 1 May). From the material it appeared that this application was put on the basis of his medical condition and lack of legal representation. None of that material appeared to have been formally filed in the Court registry. Nor was it apparent on the face of the correspondence that it had been copied to ASIC (and so, on 14 May 2012, as a matter of procedural fairness, I arranged for my tipstaff to forward a copy of those communications to ASIC's legal representative). Relevantly, the material did not seem, at least directly, to address the issue as to the application to adduce the summaries in evidence nor has anything served since done so.
As noted above, on 17 April 2012 I had directed that the Hobbs interests identify any further objection to parts of the summaries in respect of which it was maintained that these were not truly summary in form and for ASIC then to serve any further evidence on which it wished to rely in its application to adduce the summary evidence. It was made clear by Mr Clarke on that occasion that ASIC's intention was to rely on the summaries in question either as evidence (if leave were granted pursuant to s 50) or (if leave were not granted for the summaries or any part of them to be adduced as evidence of the contents of the documents) as a submission. It was further made clear, on both 11 and 17 April 2012, that if the s 50 leave were not granted then ASIC would tender each of the underlying documents from which the summaries had been compiled and would in due course make submissions as to the conclusions that should be drawn therefrom (handing up the summaries as aides memoire where appropriate).
In circumstances where the Hobbs interests had been represented on the previous two occasions when the s 50 application had been before the Court; were on notice of the intention to make this application since before April 2012 and were on notice of the actual application from the time the Notice of Motion was filed on 2 April 2012; had presumably had the benefit of advice in relation to the application at least up until Prime Lawyers had ceased as a practical matter to act for them (which Mr Saad's evidence indicated was from on or about 19 April 2012); had, through both Mr Saad's affidavits and Mr Southwick's submissions, raised issues as to the content of the summaries and the s 50 application itself; had been on notice of the application being listed for hearing on 16 May 2012 from at least shortly after the 17 April directions hearing; and had not expressed any views on the s 50 application (as opposed to other matters dealt with in relation to the Notice of Motion or the hearing date itself) in the communications forwarded to my chambers, I considered it was appropriate (in the interests of the just, quick and cheap resolution of the real issues in dispute and in the interests of efficient case management in the Court) to proceed with the application on that day.
Mr Saad was in attendance, though without instructions on the matter, and able to raise any issues he considered warranted in his client's interests consistent with his former instructions and it remains open to the Hobbs interests (should they cavil with any rulings I might ultimately make on the application) to seek a variation of those orders or for them to be set aside.
For those reasons, I proceeded to hear the s 50 application.
Legislative Provision
Section 50 of the Evidence Act1995 (NSW) provides as follows:
50 Proof of voluminous or complex documents
(1)The court may, on the application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in question in the form of a summary if the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question.
(2)The court may only make such a direction if the party seeking to adduce the evidence in the form of a summary has:
(a)served on each other party a copy of the summary that discloses the name and address of the person who prepared the summary; and
(b)given each other party a reasonable opportunity to examine or copy the documents in question.
(3) The opinion rule does not apply to evidence adduced in accordance with a direction under this section.
What constitutes a summary of the contents of documents, for the purposes of an application under s 50, and the operation of the section itself, has been considered in relatively few authorities (Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding [2004] NSWSC 768 by Einstein J; Beattie & Sutherland v Osman (No 3) [2009] NSWSC 824 by White J; and Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 by Davies J in the Supreme Court of Victoria). The section has also been the subject of comment in Odgers, Uniform Evidence Law (9th ed, 2010) at [1.2.5220].
Most recently, in Thackray, Davies J approached the construction of the Victorian equivalent to s 50 on the basis that it should not be given a restrictive or narrow interpretation, bearing in mind that the intended purpose of the section is to permit summary evidence "in the event that the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question, so long as the other party has seen the summary and been given a reasonable opportunity to examine or copy the documents" (at [66]).
Summaries sought to be adduced as evidence
What ASIC seeks leave to adduce, as summaries under s 50, are the following spreadsheets or schedules (which I have identified using the descriptions accorded to them in the respective affidavits and by reference to the tabs behind which each is to be found in the exhibits thereto) exhibited to Mr Connor's affidavit of 30 March 2012 and Mr Taylor's affidavit of 30 March 2012, respectively:
Spreadsheets exhibited to Mr Connor's affidavit
(i)ASIC scheme spreadsheets (tabs 2, 43, 48, 61, 67, 80, 89, 93, 115, 144 and 148);
(ii)Summary tables (which, as explained below, contain specific categories of information extracted from the relevant ASIC scheme spreadsheets) (tabs 3-42, 44-47, 49-60, 62-66, 68-79, 81-88, 90-92, 94-114, 116-143, 145-147 and 149-161);
(iii)Return spreadsheets (which it is acknowledged contain calculations performed on specific data taken from the summary tables, that data itself being extracted from the ASIC scheme spreadsheets and the Liquidator's spreadsheets as defined in [23] of Mr Connor's affidavit) (tabs 162-165);
(iv)The Hobbs Scheme spreadsheet (containing information extracted from the ASIC scheme spreadsheets) (tab 166);
(v)The RBA spreadsheet (reproducing RBA exchange rates for the period 1999-2009) (reliance being placed on s 85A of The Reserve Bank Act as permitting judicial notice to be taken of RBA published statistical information) (tab 167);
(vi)The Super Save spreadsheet, Integrity Plus spreadsheet and Collard Schemes Spreadsheet (each containing information extracted from the Hobbs Scheme spreadsheet) (tabs 168, 169 and 170, respectively) (to which I have referred in these reasons as the "miscellaneous scheme spreadsheets"); and
(vii)The Treasuries spreadsheets (extracting information contained in what are defined as the Cadent account documents) (tabs 171-177).
Schedules exhibited to Mr Taylor's Affidavit
(i)Super Save Summaries (tabs 5, 6, 37-41) (prepared following the review of statements for the scheme accounts, promoter spreadsheets and investor information forms as deposed to by Mr Taylor in his affidavit);
(ii)Integrity Summaries (tabs 42, 43, 78-80, 82-83) (prepared in a similar manner from the information corresponding to the above but in relation to the Integrity Plus scheme); and
(iii)Destiny Summaries (tabs 85-86) (again prepared following a review of the corresponding information for the Destiny scheme).
An explanation was given by each of Mr Connor and Mr Taylor as to the manner in which the respective schedules or spreadsheets were compiled and as to the underlying documents from which the information said to be summarised in those documents was drawn. In order to understand the objection raised by Mr Southwick for the Hobbs interests to their admission in evidence it is necessary to set out in some detail the explanation given as to how the documents were created and what they comprise.
Exhibits to Mr Connor's affidavit
As noted above, Mr Connor is a Senior Investigator with ASIC. Exhibited to his 30 March 2012 affidavit are documents collated behind tabs numbered 1 to 177. Behind tab 1 is a DVD containing images (in PDF form) of all of the underlying documents to which reference is made in his affidavit (and from which information has been extracted as explained in Mr Connor's affidavit) together with an Excel spreadsheet indexing the underlying documents. I am informed by Mr Clarke that there are 5,007 documents on the DVD.
In issue in the proceedings are a number of different schemes. Mr Connor explains that a different set of spreadsheets/summary tables has been prepared for each of the different schemes. The compilation of the spreadsheets/schedules for each scheme follows the same pattern. There is a main scheme spreadsheet (referred to as an ASIC scheme spreadsheet) under the first of the tabs relating to each particular scheme from which information has been extracted for the purpose of the preparation of a number of tables described as summary tables and other spreadsheets (some of those other spreadsheets also drawing on information contained in documents prepared by Mr Taylor and his staff in relation to the two schemes of which he is the liquidator - referred to as the Liquidator's spreadsheets). Other than the information copied and pasted from the official RBA sources, and (perhaps) any calculations performed in relation to the information extracted in the ASIC scheme spreadsheets, all of the information in the summary tables and following spreadsheets has been sourced (directly or indirectly) from the underlying documents.
Mr Connor deposes at [14] that he has personally compiled the ASIC scheme spreadsheets (as defined in his affidavit) for four of the schemes. Other members of the ASIC team (identified in his 11 April affidavit), at his direction and under his supervision, have compiled the ASIC scheme spreadsheets for the remaining schemes.
At [15], Mr Connor explains that each ASIC scheme spreadsheet summarises the following information for the relevant scheme:
(a) information recorded in statements for the bank and/or Technocash accounts of the scheme (being the accounts pleaded in the paragraphs 135, 166, 179, 193, 203, 211, 219, 225, 235, 241, 248, 255, 258 and 266 of the Second Further Amended Statement of Claim for the period during which ASIC alleges that each of the schemes operated - referred to as the "scheme accounts")
(b) information recorded in transaction specific records of the bank and/or of Technocash (referred to as the "transaction records")
(c) information recorded in receipts issued to customers by banks (referred to as the "transaction receipts"); and
(d) information recorded in some of the documents which are relevant to the scheme (referred to as the "scheme documents").
Mr Connor deposes that all of the documents referred to in [15] have been copied into the database prepared for the litigation.
At [21] of his affidavit Mr Connor provides further information as to the information contained in each of the columns of each ASIC scheme spreadsheet and the source of that information (being the documents referred to in [15(a)] to [15(d)] of his affidavit, copies of which are to be found on the DVD).
The ASIC scheme spreadsheets list (row by row) information as to debit/credit transactions by reference to bank account number, date, description, currency, characterisation (for example, and without being exhaustive, referring to investment of capital, bank interest, bank fees, currency conversion, "other payment", transfer from trader, Secured Bond Ltd Shareholding Profit Pay Out), bank record payer/payee, scheme record payer/payee and scheme record payer/payee's IBC). There is no entry representing any total of the amounts so listed in the spreadsheets.
Relevantly, having regard to one of the objections raised to the characterisation of this material as a summary, Mr Connor deposes that the column in the ASIC scheme spreadsheets headed "Bank Record Payer/Payee" identifies the person or entity recorded in the bank or Technocash statements and any underlying bank or Technocash records for the scheme account that, in relation to a debit to the scheme account, received the corresponding credit and, in relation to a credit to the scheme account, made the corresponding debit. The column headed "Scheme Record Payer/Payee" contains similar information referable to the scheme records. The column headed "Scheme Record Payer/Payee's IBC" contains the International Business Company (IBC) number of the payer/payee as recorded in the scheme records.
Pausing there, on their face the ASIC scheme statements do not purport to be anything more than a recitation of information in relation to particular transactions (which information Mr Connor deposes was summarised from the underlying documents). If it were to be shown that the column headed Characterisation involved the exercise of judgment as to the nature of the transaction so recorded, then the position might be different but as I understand it the information recorded in this column is drawn from what appears on the underlying documents in relation to each particular transaction (and there was no suggestion otherwise by the Hobbs interests after their representatives had carried out an initial review of the spreadsheets).
In relation to each scheme, following the preparation of the ASIC scheme statements, documents referred to as "summary tables" were prepared. Mr Connor deposes that these tables summarise select data extracted from the ASIC scheme spreadsheets.
At [20] of his affidavit, Mr Connor sets out separate tables (one for each of the 11 schemes), providing an index to the tables and identifying in each case the ASIC scheme spreadsheet for the relevant scheme and the summary tables derived from that ASIC scheme spreadsheet (and containing a brief description of the data contained in each of the summary tables, referring to the paragraph of the Second Further Amended Statement of Claim to which it relates). Mr Connor confirms that the contents of the summary tables were derived in each case from information already summarised in the relevant ASIC scheme spreadsheet.
Logically, to the extent that the information contained in the summary tables (for example, those for the Master Fund are to be found at tabs 3 to 42 to the exhibit to Mr Connor's affidavit) is a subset of the information in the main scheme spreadsheets then it could also be sourced directly in the underlying documents themselves (even though the manner in which the summary tables have been compiled has been physically to extract the information therein from the information already summarised in the ASIC scheme spreadsheet).
The respective summary tables do, however, contain an additional entry, namely a total (appearing at the foot of the respective summary tables) of the amounts in the listed entries in that table. Mr Clarke confirmed that these totals relate directly to allegations contained in particular paragraphs of the Second Further Amended Statement of Claim (as identified in [20] of Mr Connor's affidavit) and has foreshadowed that, at the final hearing, ASIC will submit that those summary tables identify the amounts and the payments referred to in each of those relevant paragraphs of the pleading.
The balance of the spreadsheets prepared in respect of each scheme and exhibited to Mr Connor's affidavit are the return spreadsheets, RBA spreadsheet, Hobbs Scheme spreadsheet, miscellaneous scheme spreadsheets and the Treasuries spreadsheet. A brief description of those follows.
As to the return spreadsheets, at [25] of Mr Connor's 30 March affidavit he explains that these were compiled by reference to material extracted from the "scheme spreadsheets" (defined at [23] to include the ASIC sceme spreadsheets, to which I have already referred, and certain spreadsheets that were compiled by Mr Taylor and which had been reviewed by Mr Connor at the time of preparation of his affidavit - those being the Liquidator's Scheme spreadsheets in relation to the Integrity Plus Unit Trust (in Liquidation) Capital Reconciliation Work Sheet and the Reconciliation of Investor - Capital Returns for the Super Save Superannuation Fund spreadsheet.
The return spreadsheets were compiled by another employee of ASIC (Mr Peck), under Mr Connor's direction and supervision. Mr Connor explains that the compilation of these spreadsheets was in order to identify the extent to which the accounts and trading positions of the commodity trading advisors who traded in relation to each of the Master Fund, Super Save Superannuation Fund, Enhanced Fund, and Integrity Plus Unit Trust, were in profit or loss at the time when each payment of returns, commissions or dividends to shareholders was made from the scheme accounts for each of those funds. The return spreadsheets are to be found at tabs 162 to 165.
The manner in which the return spreadsheets were compiled is explained in [26] and [27] of the affidavit: in essence, it is said that the ASIC team 'filtered' the scheme spreadsheets for the corresponding scheme to identify the dates on which payments bearing the transaction characterisation of 'return', or 'commission', or 'return pay out' were made. (In the case of the Super Save and Integrity Plus funds, the relevant extracts were of payments characterised as 'investor return', 'RTN' or 'commission out'.) Thus far, the exercise seems to have been an administrative one of identifying in each of the funds the dates of entries in the scheme spreadsheets in respect of which a particular transaction characterisation or payment type is shown. Those entries were extracted and the information in relation to those transactions was set out in columns showing the returns, commission and (where applicable) shareholder payments paid on the particular date.
Mr Clarke thus describes the process that was undertaken as one whereby information in an existing summary spreadsheet was analysed (but not altered) and some of the information was then extracted and placed into another spreadsheet.
Mr Connor describes (at [28]) what information is there recorded. Certain of the columns record the total of the amounts listed in the respective row or column. In the case of the Integrity Plus return payment spreadsheet there were additional rows recording information drawn from other documents identified in [29].
At [31], Mr Connor explains how the Hobbs Scheme spreadsheet (contained at tab 166) was created. Again, information was extracted from the ASIC scheme spreadsheets following an exercise in which transactions with a particular transaction characterisation were identified. These were copied and pasted into a new spreadsheet with the addition of the name of the scheme and with the deletion of some of the columns that appeared in the original scheme spreadsheets. The rows were then sorted chronologically and a column was added recording information from wither the Bank Record Payer/Payee column of the ASIC scheme spreadsheets or the person recorded in the Description column of the Liquidators' Scheme spreadsheets. Relevantly, there were columns added setting out the currency exchange rates at the relevant times (drawn from the RBA published information) and there was a calculation as to the Investment A$ equivalent or Withdrawal $A equivalent. (There is a question as to whether those calculations would properly be characterised as a summary, which I consider in due course.)
Mr Connor explains that the Australian dollar equivalent of some of the amounts recorded in the Hobbs Scheme spreadsheet was calculated by reference to the exchange rates published by the Reserve Bank of Australia for the years 1999 to 2009. Those published rates were downloaded, then copied and pasted into the spreadsheet at tab 167 ([31(f)]).
Three further spreadsheets (the miscellaneous scheme spreadsheets) were prepared by Mr Peck, at Mr Connor's direction, again extracting information from the ASIC scheme spreadsheets, in the manner referred to in [32]: those being the Super Save spreadsheet, Integrity Plus spreadsheet, and the Collard scheme spreadsheet (tabs 168, 169 and 170). The information extracted from the earlier spreadsheets was organised in columns that include exchange rate details. The data in certain columns (those headed Scheme Members, Scheme Members in 12 Months to Date and Amount Raised in $A in 12 months to date) was said to have been re-calculated for those spreadsheets (and, as I understand it, Mr Clarke conceded that the data from some of the rows involved more than simply the extraction of information already summarised in the earlier spreadsheets).
Finally, the Treasuries spreadsheets (referred to at [35] and appearing at tabs 171 to 177) were compiled by Mr Connor (with assistance from others in the Hobbs investigation team at ASIC) to summarise the purchase and sale of US Treasuries as recorded in the Cadent documents for the Cadent accounts in the names of certain listed entities. The process undertaken to prepare those spreadsheets is explained at [36]. At [36(c)], Mr Connor says that the amounts appearing in particular columns on those spreadsheets were calculated by adding up to the relevant date all of the amounts in certain columns and subtracting amounts recorded in other columns (see [37] and [38]).
Mr Clarke submits that the information in the Treasuries spreadsheets is drawn from that in other spreadsheets, and in turn, the underlying documents but he concedes that there is some calculation involved in the preparation of those spreadsheets - referring in particular to the calculation of the amount of the Total Par Value of Treasury STRIPS and Prin STRIPS (which he says was done according to the formula described in [36(c)] and cross-checked as described in [36(d)].
Mr Taylor's affidavit exhibits
In relation to Mr Taylor's affidavit, the documents sought to be adduced under s 50 as summary evidence of the contents of underlying documents are the schedules listed in the contents page to Mr Taylor's affidavit as being at tabs 5 (the Super Save Reconstructed Bank Accounts Schedule), 6 (the Super Save Summary Schedule), 37 (the Reconciliation of Investments Schedule), 38 (the Investor Capital Matching Schedule), 39 (the Investor Distribution Matching Schedule), 40 (the Super Save Investor Schedule), 41 (the Super Save Summary of Commissions schedule), (those being in relation to the Super Save Superannuation scheme); 42 (the Integrity Scheme Reconstructed Bank Account Schedule), 43 (the Integrity Summary Schedule), 78 (the Reconciliation of Integrity Investments Schedule), 79 (the Reconciliation of Investor Information Schedule), 80 (the Schedule of Returns), 82 (the Integrity Investor Scehdule), 83 (the Integrity Summary of Commissions schedule), (those relating to the Integrity Plus fund; 85 (the Destiny Reconstructed Bank Accounts Schedule) and 86 (the Destiny Summary Schedule) (those relating to the Destiny scheme).
At tab 3 of the exhibit there is a DVD that Mr Taylor deposes contains 16 folders, each of which contains a number of PDF files comprising a series of account statements for the accounts set out in paragraph [2] of his affidavit. Mr Clarke informed me that the DVD contains 1,479 documents, some of which exceed 50 pages in length.
As noted earlier, Mr Taylor was appointed as the liquidator of the Super Save scheme and the Integrity Plus scheme. He deposes to having made previous investigations into the structure and affairs of those schemes, for the purposes of identifying investors in those schemes, how the schemes worked, and who was paid money out of the schemes; and that, in conducting his investigations, he was assisted by employees of HLB Mann Judd (as identified in [7]). While this seems to have been included by way of background, it also establishes that a number of the underlying documents on which the schedules exhibited to Mr Taylor's affidavit are based may well constitute business records of the liquidation.
Mr Taylor deposes that he has been engaged in a detailed review and analysis of a range of documents in schemes, including the documents contained in paragraphs [17] to [35] and that he has had, during the course of his investigations, discussions with some of the persons who are proposed to be called as witnesses in this proceeding (Mr Truong, Mr Wood and Mr Koutsoukos). Mr Clarke's submission is that those conversations were in the ordinary course of Mr Taylor's business as liquidator of the two schemes (as part of the investigations dealing with those witnesses) but that in any event what Mr Taylor has done has been to summarise in the schedules information contained in a series of underlying documents and that this is sufficient to permit the use of the document as a summary (irrespective of Mr Taylor's position as liquidator of the schemes). (It is further submitted that this is not a summary of a kind that could only be prepared by a liquidator nor is it one that would require the use of an expert.)
In [12] Mr Taylor identifies the matters addressed in his affidavit, those being the number and identity of investors in the Super Save and Integrity Schemes; the amount invested by and returns paid to each investor in those Schemes; the return of capital, if any, to investors in those Schemes; the destination and amount of certain payments from the accounts related to each of those Schemes and the source and amount of certain payments to the accounts related to each of those Schemes. He further deposes that the underlying work and analysis referred to in his affidavit "formed the basis of the schedules" referred to in the affidavit, those schedules being updated from time to time as part of the continuing liquidation of the Schemes ([13]).
He deposes at [14] that the underlying work and analysis undertaken to address the matters in [12] has included the tasks of: identifying and reviewing relevant business records of the two Schemes (including the account statements set out in [17], [40] to [44] and [143] of his affidavit; identifying and reviewing "relevant documents" obtained from third parties during the course of the liquidation of the Schemes; and updating schedules previously prepared based on those relevant business records and third party documents. [15] sets out certain assumptions that Mr Taylor says that he has made in relation to the administration of the schemes and the payment of commissions based on the returns paid to the investor.
At [17] - [35], Mr Taylor identifies in detail the documents and information concerning the Schemes with which he was provided by ASIC, or that he obtained from the persons identified and described by him as the promoters of the Schemes (Messrs Truong, Wood and Koutsoukos), or obtained by other enquiries made by him, including responses by investors in relation to the schemes (the latter being used to reconcile and corroborate promoter records, account statements and other documents referred to in his affidavit). As I read his affidavit, copies of all of the documents to which he refers are contained on the DVD at tab 3.
At [36], Mr Taylor says that, based on his review of the documents described in [17], he has identified the transactions which occurred in the Super Save Scheme accounts (as set out in the Super Save Scheme accounts schedule) between June 2006 and December 2007. He says at [45] that he and his staff, at his direction and under his supervision, have reviewed: the statements for each of the Super Save Scheme accounts; the Super Save promoter spreadsheets; and the Super Save Scheme Investor Information Forms (all of which ASIC submits comprise the business records of the liquidation and all of which are described by Mr Taylor in the preceding paragraphs as noted above) and, on the basis of that review, has identified that Super Save Scheme investors' investment funds were deposited in particular identified accounts ([36]).
Mr Taylor's staff under his direction and under his supervision then prepared a schedule titled "Reconstructed Bank Accounts Super Save Superannuation Fund" (a title that of itself may well have given rise to suspicion that the document was more than a summary) of all the transactions in those accounts that are identified in paragraph [46] as being the accounts into which investors' investment funds were deposited.
At [49] and following, Mr Taylor explains how that schedule was prepared. He says that the transactions recorded in the ASIC spreadsheets and the Super Save Accounts statements were reviewed (the starting point being the ASIC spreadsheets) and that relevant information from the documents identified in [50] was then incorporated into the schedule.
At [51] - [52] and then from [57]-[64], Mr Taylor explains the contents of the schedule at tab 5, from which he says (at [72]) that he has calculated that investors deposited particular amounts and the returns or distributions paid to investors.
Mr Taylor also deposes that a Super Save Summary Schedule (at tab 6) was compiled summarising Super Save Reconstructed Bank Accounts Schedule by "Transaction Type" according to a particular coding. In this regard, the exercise carried out, as I understand it, was to extract particular entries in much the same way as the summary tables referred to in Mr Connor's affidavit were prepared.
As to the schedules at tabs 37, 38 and 39, these were compiled following the review of various documents (as set out in [73] onwards), from which Mr Taylor reached conclusions as to the way in which particular deposits or investments or transactions should be treated. They represent a reconciliation of the Super Save Scheme Accounts statements, promoter spreadsheets and investor information forms as explained in [102] and onwards. The outcome of that reconciliation process was itself summarised in a further schedule (at tab 40), the Super Save Investor Schedule, the contents of which are explained at [130]. Mr Taylor deposes that on the basis of that schedule he has made certain calculations as to the total capital amount invested during the operation of the Super Save Scheme and other matters ([131]).
The exercise of preparing the schedule summarising commissions in relation to the Super Save scheme is explained in [133] - [136], Mr Taylor also explaining the basis on which a minor variance was treated. He goes on to explain certain calculations based on the schedules at tabs 5 and 6 in [137] and an amount as to which he was not able to draw any conclusion as to how or for what purpose it was transferred (at [138]).
From [139], he explains how a similar exercise was carried out for the Integrity scheme and from [234] in relation to the Destiny Technocash account. (From [223] - [233], he explains the calculations he has made as to the co-mingling of the Super Save and Integrity Scheme funds.)
It is clear from Mr Taylor's affidavit that the schedules exhibited to his affidavit have been compiled in part by the collation and re-organisation of information extracted from the underlying documents referred to in his affidavit. However, it also appears that there has been an application of judgment in the manner in which particular parts of the schedules (or at least those other than the principal "reconstructed" bank account schedules) were compiled.
This highlights one of the bases of complaint made by Mr Southwick as to the proper characterisation of the Taylor schedules as summaries. I deal with this when considering the issues for determination on the present application, to which I now turn.
Application of legal principles
There are three matters to be determined for the purposes of the s 50 application: whether the relevant spreadsheets and tables are summaries of information contained in the underlying documents for the purposes of s 50 (rather than, for example, comprising conclusions or statements of opinion); whether the volume and/or complexity of the underlying documents is such that it would not otherwise be possible conveniently to examine the evidence; and whether a reasonable opportunity has been given to any other party to the litigation to examine or copy the documents in question (and in that regard the fact that there might between now and the trial be a reasonable opportunity to examine or copy the documents is strictly not to the point).
The second of those matters can be disposed of with little difficulty. There can be no doubt that the volume of the underlying documents of the kind which would otherwise be required to be tendered individually in the quantities in question (5,007 in the case of the information sought to be adduced by way of the Connor spreadsheets and 1,479 in the case of the Taylor schedules, some of which documents are of many pages in length) is sufficient to attract the operation of s 50. The more contentious issues are the first and third.
- Are these summaries for the purposes of s 50?
In Gate Gourmet, Einstein J considered that it was a misconception to suggest that a summary, to fall within s 50, must include every detail or fact or feature of the documents purporting to be summarised (at [19]).
It is submitted by ASIC that it follows a summary of documents under s 50 may properly be limited to the specific primary facts otherwise being sought to be adduced by that party from the underlying documents (without purporting to summarise the whole of the contents of those documents); in other words that a summary of one aspect or part only of the content of the underlying documents can fall within s 50. In principle, I agree with that submission. Were it to be otherwise then it might well be that there was no real benefit obtained by the production of the summary as evidence of the underlying documents, since the summary might be almost as voluminous as the documents themselves. (Of course, if the summary was only of partial contents of a document and by reason of that fact were to present a misleading picture of the contents then that would be a reason not to permit the said summary to be adduced in lieu of the underlying documents themselves.)
In Beattie, at [25], White J expressed the view that a summary, to be within s 50, should be in the form of an abstract or compendium or epitome or a brief statement of the matters set out in the documents. (His Honour there did not expressly address the question whether a summary of part of the contents of the relevant documents was permissible.) In Beattie, what had been sought to be admitted as a summary in that case (having initially been rejected as a statement of opinion for which no basis had been laid, being inadmissible under s 76, not admissible as expert opinion evidence under s 79 and liable to be excluded under s 135) was a schedule annexed to an affidavit sworn by the finance manager of the alleged creditor. The schedule purported to summarise, as at a particular date, the debt owing or estimated to be owing to the creditor.
White J noted that the schedule listed a number of items (for some of which there was reference in the schedule to other documents referred to as in the schedule as "supporting evidences"). The items in question included stated balances apparently said to be referable to "Past loan agreements signed"; various items described as payments by the creditor on behalf of the debtor company (advertising charges; purchase of computer and mobile handsets; payment in relation to deed settlement); an item stated to be a loan advance (with reference to supporting evidence in the nature of "loan application forms with approval and disbursement details"; and then a number of items for credit to be given to the alleged debtor. Those listed items were followed by a stated total debt position, which was then further adjusted by various debits (including management fees, commission and loan interest) and credits (one of the latter being described as a debt reconciliation). The schedule then contained a statement that the estimated debt owing, after "other adjustments" (presumably those referred to above) was in a particular amount.
His Honour considered that, in at least some respects, the schedule was not a summary of the contents of two or more documents in question but a calculation of amounts claimed to be due under the underlying documents (such as the items in relation to the operator service fee, management fee and loan interest). As I understand it, the difficulty in this regard was, for example, that the underlying document contained a provision for, say, interest to be calculated at a particular rate after a net adjustment of revenues and the corresponding item in the schedule represented a calculation of that amount, rather than summarising the content of the document as such (i.e. summarising the provision requiring payment of interest).
Perhaps more relevantly to the circumstances of the present case, his Honour considered that the item representing a total of advertising charges paid over the relevant period (which was the sum of charges in numerous individual invoices for that period) was a calculation of the total sum stated in each of the invoices rather than a brief statement of the contents of the invoices and hence was not a summary for the purposes of s 50. It was in this context that his Honour said (at [25]) that:
A summary of the contents of two or more documents to fall within s 50 should, I think, be an abstract or compendium or epitome or a brief statement of the facts or matters set out in the documents.
His Honour rejected the tender (indicating that he would have done so in any event on the ground that there had not been a reasonable opportunity for the examination or copy of the underlying documents - there having been only a week during which the documents had been made available to the debtor).
That approach was the subject of criticism by Odgers Uniform Evidence Law (9th ed, 2010) [1.2,5220] as being "an unduly narrow approach to the provision, particularly bearing in mind the policy behind it and the fact that the provision refers to adducing evidence of the contents of documents 'in the form of a summary'".
In Thackray, Davies J considered the approach to the equivalent provision in Victoria. Insofar as there was a difference in approach emerging from Gate Gourmet and Beattie, her Honour preferred the view of Einstein J in Gate Gourmet and said that she did not consider the section should be construed restrictively to require a summary of each document in question, placing emphasis on the fact that s 50 contemplated a summary of the evidence sought to be extracted from the underlying documents.
In Thackray, as it appears from her Honour's judgment, the summaries sought to be relied on as evidence contained an epitome of each source document, the key transaction data (amount, date, expense description, supplier and payment details for each transaction) being recorded in the pages of the spreadsheets. There is thus a clear similarity with the content of the ASIC scheme spreadsheets, from which the summary tables are derived, which also set out key information said to be sourced directly from the underlying documents. (At [69], having noted that the sheer volume of documents made it impractical to adduce the evidence in a way that would have probative value, her Honour observed that an analysis and summary of the documents would have been required in any event.) Her Honour admitted the summaries into evidence under s 50 as to the contents of the documents summarised therein (though not for the purpose of establishing that the method of allocation of expenses and remuneration among the schemes was fair and reasonable).
The reference by White J in Beattie to an abstract, compendium or epitome of the contents of underlying documents accords with the Macquarie Dictionary definition of "summary". That definition also includes "a brief and comprehensive presentation of facts of statements". (To the extent that only a partial presentation of facts is summarised from the source documents an argument might arise that this was not a comprehensive summary. However, for the reasons adverted to above, I consider that a comprehensive summary of particular facts (such as, for example, a listing of all payment transactions to or by a particular entity or on a particular date or in relation to a particular investment) would be a summary falling within s 50.)
From the objections made by Mr Southwick when he did appear on the motion, and the matters raised in submissions by Mr Clarke as to what might perhaps be anticipated as potential objections by the Hobbs interests, it seems that there are three bases on which the documents sought to be tendered might be argued not to be properly admissible as summaries: first, insofar as the schedules or spreadsheets sought to be tendered as summaries include an arithmetical addition of particular entries, Mr Clarke raises the issue as to whether these might be said to fall foul of the view expressed by White J that an arithmetic calculation was not a summary; second, as to whether the schedules or spreadsheets encompass an exercise of judgment or discretion and hence are not summaries but statements of opinion or conclusions drawn from the underlying documents or other material; and third, whether this is an impermissible attempt to adduce expert evidence other than in accordance with the Rules for the admission of expert evidence. There is some overlap between those bases for criticism of the so-called summaries. Mr Clarke also raised the possible objection that a summary prepared by extracting material from a document that was itself a summary might not be within s 50 (though strongly contending otherwise).
As to the first, it is submitted by ASIC that s 50 should not be narrowly construed and that a calculation of a total sum of listed amounts falls within the meaning of a "summary" as it represents a "summing up" of the evidence sought to be adduced from the underlying documents. Reliance is placed on Thackray for the proposition that a summary of amounts admitted under s 50 will constitute sufficient evidence that the quantum is mathematically correct, without the need to tender the underlying documents.
What is here sought to be adduced, to prove a lengthy series of payments and the details relating to such payments, are spreadsheets in which details of each of the payments are listed. Those are the primary facts identified in the documents for which the documents would otherwise be sought to be tendered and what the summary table then contains is the aggregate of the amounts in question. Insofar as a calculation of the total sum of amounts of such payments represents a summing up of the primary facts, it is submitted that this is within the scope of a "summary" for the purposes of s 50 (provided the calculation is able to be objectively determined from specified primary facts). I think there is force in that submission. Provided that the calculation of the total sum does not require the application of any opinion or judgment as to what amounts are to comprised in the calculation, but on its face is simply an arithmetical exercise, I would admit the whole of the summary table as a summary. (The relevant difference I see between the summary tables here sought to be adduced - which list amounts extracted from the underlying documents and simply add up those amounts - and the schedule in Beattie is that there an element of judgment was involved in the calculation of some or all of the amounts then added or subtracted to reach the total sum and, in relation to the invoice charges, it seems that the schedule did not contain the component charges then added together but simply the result of the addition.) If I were to be wrong on this, however, then the balance of the summary tables would nevertheless be admissible as a summary and the last line (containing a total of the amounts in the previous entries) would be read as a submission (and that is how I would have treated them).
As to the second basis for objection, in his affidavit sworn 17 April 2012, Mr Saad expressed the opinion that the scheme spreadsheets did not summarise the scheme documents but, rather, contained an interpretation of them. Mr Saad based that opinion on his review of some of the entries in the schedules (as set out in his affidavit). In reliance on this it was submitted by Mr Southwick that some of material in the spreadsheets/schedules (sought to be admitted as a summary) required some other inferences to be drawn or reference to some other document to establish the information so recorded (and hence that is not properly a summary of the information in the underlying documents themselves).
As to the particular entries in respect of which Mr Saad had raised a concern, I was taken to the columns in the ASIC scheme spreadsheet at tab 2 recording "bank record payer/payee" and "scheme record payer/payee" details, respectively). The issue raised by Mr Saad was that the entries at row 55 of the ASIC scheme statement for the Master Fund indicated that that the bank record payer/ payee was Fletcher Vautier Moore (which I understand to be a NZ firm) and that the scheme record payer/payee was Mr David Hobbs. Mr Saad deposed that Mr Hobbs' name did not appear on the relevant underlying document and hence argued that this entry reflected an interpretation by the relevant author of the schedules in respect of the information contained in the underlying document (namely that there had been a conclusion drawn that this payment attributed in the bank record to Fletcher Vautier Moore was a payment to Mr Hobbs, where that information did not appear on the underlying document). Criticism was also made by Mr Saad at [29] of his affidavit in relation to the payment recorded in row 209 of tab 2 (as a payment attributed to Mr Collard and Ms Li), said to have been incorrectly so attributed.
In response to this, in an affidavit sworn 14 May 2012 Mr Connor deposed to the fact that he had reviewed the material in his first affidavit in light of the issues that had been raised by the Hobbs interests in Mr Saad's 17 April 2012 affidavit. Mr Connor reviewed not only each of the payments to which Mr Saad had referred but also all other payments recorded in the Master Fund Scheme spreadsheets as payments to Mr Collard and Ms Li or MagnyCours Ltd (those being the payees in respect of whom Mr Saad had raised an issue). He identified a number of errors in the entries (as set out in [8]), some going beyond those noted by Mr Saad and explained how that had arisen and the amendments that should be made to the spreadsheet to correct those errors. At [10] of Mr Connor's affidavit of 14 May 2012, he explains how the name of the relevant IBC for a payer or payee had been drawn from the underlying documents, accepting that the criticism of the entry in row 209 of tab 2 was well-founded.
Mr Connor has corrected the errors so identified. He has reviewed the rest of the information in the "bank record payer/payee" and "scheme record payer/payee" columns and has deposed that he has identified the information in the underlying documents that accords with the entries as recorded or summarised in those schedules. He has reviewed the other like entries to those in respect of which criticism was made and deposes to his belief that there are no further such errors ([15]). Apart from the corrections identified in [13], Mr Connor has deposed at [9] that he is satisfied that the rest of the information to which Mr Saad had referred and the other payments recorded in the Master Fund spreadsheet represent an accurate summary of the underlying documents that are identified in the spreadsheet. Amended pages for substitution in the spreadsheets were provided.
In this regard, Mr Clarke has submitted that, to the extent that a submission might be made that any of the columns do more than summarise any of the underlying documents (namely that they go further and interpret the contents of the underlying documents), then that objection could be taken at the final hearing - in effect, as I understand it, that the tender of that part of the summaries could be deferred to permit any objection of this kind to be made at the trial in relation thereto (and that if such an objection were to be well-founded, ASIC would then tender further documents to demonstrate the facts sought to be proved by the summaries (for example, to use the entry referred to by Mr Saad, that a particular payment to the firm Fletcher Vautier Moore was a payment to Mr Hobbs). Accordingly, Mr Clarke submitted that if there was a concern that the information in those two columns was more than a summary they might at this stage simply be allowed as a submission. Alternatively, he submitted that the documents might be admitted as a summary, subject to the right of any defendant to argue at the trial that the information in those columns was actually a submission not based on the underlying documents.
In relation to the errors or perceived errors in the schedule that were identified by Mr Saad, I accept Mr Connor's evidence as to the outcome of his further review. As amended, I do not consider that the ASIC scheme spreadsheets go beyond what is admissible as a summary of the contents of the underlying documents (the fact that some errors in their compilation were made and have now been corrected does not establish that the spreadsheets were not at all times summary in form) . Similarly, I consider that the summary tables are admissible as summaries.
The question then arises as to whether any of the balance of the spreadsheets exhibited to Mr Connor's affidavit or the schedules exhibited to Mr Taylor's affidavit involve an application or exercise of judgment so as to go beyond the notion of a summary for the purposes of s 50. As to the Connor spreadsheets, it seems to me that such an issue might arise in relation to the calculation of the currency equivalents based on the RBA published data. However, given that the Court may take into account the published RBA data, a combination of those published exchange rates and the statements recorded in the underlying documents as to payments or withdrawals in a particular amount on a particular day produces the conclusion that the currency calculation itself is a product of no more than an arithmetical exercise. Therefore, I consider that it can be admitted as a summary or summing up of the relevant facts in the underlying documents and admissible under s 50. If not, the currency equivalent information in the Connor documents would be read as a submission but the balance of the document admissible as a summary.
As to the miscellaneous scheme spreadsheets and the Treasuries spreadsheets, at this stage insofar as they seem to incorporate calculations based on material not necessarily evident on the face of the underlying documents, I would not admit them as summaries (but it is open to ASIC at the hearing to rely on them as submissions or to re-tender them as summaries if there is material to show that my preliminary view in this regard is incorrect).
Where I have had more difficulty is in relation to the Taylor schedules. Where, the schedule contains more than a summary of the contents of underlying documents and an arithmetical summing up of the facts so summarised from the underlying primary documents (those entries being evident on the face of the schedule and themselves being a summary of the contents of the underlying documents), then that portion of the schedule could not in, my view, be adduced as evidence of the contents of the underlying documents pursuant to s 50 and could be treated as no more than a submission.
So, for example, Mr Taylor has adopted a particular approach to coding transactions it might be said that this was not a summary of the information in the underlying documents but, instead, involved an exercise of judgment, this would not strictly be a summary for the purposes of s 50. So, for example, at [52], Mr Taylor says:
The fourth column entitled 'Transaction Type' records an internal coding assigned to each transaction by my staff at my direction.
If what that paragraph, properly read, means is that this is a summary of all the transactions that Mr Taylor or his staff have concluded (otherwise than by reference to a statement appearing on one or more of the documents themselves) fall within a particular type, then that would not in my view be a summary for the purposes of s 50 (a proposition that Mr Clarke in the course of submissions accepted).
However, what Mr Taylor explains (at [53] and [54] is that the coding ascribed to the transactions in the "Transaction Type" column was drawn from the underlying documents themselves and that where it was not known following a review of those documents, then it was noted as "unknown in". Therefore, on the evidence before me I am satisfied that the coding of transactions by transaction type was drawn from (and a summary of) information contained in the underlying documents themselves and not the product of a conclusion drawn as to the applicable coding. (A similar conclusion would follow for the documents at tabs 42 and 85 in relation to other schemes.)
Tab 6 seems to be in a different category. Mr Clarke accepted that the Notes To the Adjustments appearing at the foot of the document at tab 6 of Mr Taylor's documents were not a summary of information in the underlying documents but a commentary or explanation of the table itself (and hence not tendered as a summary). Those adjustments are explained in [68] of the affidavit as made to the amounts before calculating the total in tab 6. Mr Clarke accepts that [68] evidences a calculation involving the making of certain adjustments (such as for bank fees). In my view, the schedule appearing at tab 6 itself (and not simply the notes thereto) is properly to be regarded as a submission and not a summary (since the adjustments appear to various entries throughout the schedule) even though some of the entries on that document do appear to summarise information without the making of any calculation or adjustment.
Similarly, where (such as at [75] or [78]), it is said that, for the purposes of this affidavit, Mr Taylor has "treated" certain deposits as investments, that suggests an application of judgment or a categorisation or classification of information rather than a summary. (Again, Mr Clarke accepted this.) To the extent that Mr Taylor's affidavit indicates that conclusions have been drawn from information itself summarised from underlying documents (such as the conclusion at [81] drawn from the information summarised in [80]), I consider that the document should not be characterised as a summary (see also in this regard [84], [87], [92] and the "reconciled capital investment" information sent to the investors for confirmation referred to at [126]). While the conclusions drawn from this material might themselves be admissible as conclusions based on evidence otherwise before the Court, documents outlining or recording those conclusions would not be a summary for the purposes of s 50 (and the admissibility of those conclusions if tendered as opinion or expert evidence might give rise to other objections of the kind foreshadowed by Mr Southwick).
For other documents, such as the schedule at tab 40 (described as the outcome of a reconciliation process based on a review of investor form returns, Mr Clarke submitted that where all the information therein contained (and the characterisation ascribed thereto) was able to be derived from the primary documents (the underlying documents being the documents whereby certain materials were sent out to investors and investors signed and returned them) this was a permissible summary. I agree in principle with this submission but the difficulty I have is that the investor reconciliation process itself seemed to be a process whereby disputed entries were resolved on the basis of information provided - which suggests that there was conflicting information in the underlying documents and, if so, the resolution of that nevertheless must in my view involve an element of judgment. Without a review of the particular underlying documents it is difficult to comment further on this.
There are various other paragraphs of Mr Taylor's affidavit which refer to the calculation of payments (see also [137]). It seems to me that as a matter of principle where the documents contain more than an arithmetic calculation of the total of listed entries drawn from the underlying documents then they would go beyond what is admissible under s 50 as a summary.
Similarly, at [214] and following, Mr Taylor makes reference to a summary of commissions table prepared and that refers to two amounts identified in [218]. Mr Taylor says that when he came to review the Technocash account statements in preparing the reconstructed bank account schedule he could only identify the commission payments of those amounts which left a difference of approximately $38,000 and he took steps to reconcile that difference, but in [220] he says that "given the size of the discrepancy in the amounts and the complexity of the reconciliation process, my staff and I considered the variance not to be material and did not complete the reconciliation process".
Mr Clarke, quite fairly, conceded that there were some portions of the Taylor schedules that did involve an element of calculation or exercise of judgment and, pursuant to a direction made at the conclusion of submissions on 16 May 2012, ASIC has since notified those portions of Mr Taylor's schedules that it is conceded make reference to calculations included either in a summary based on underlying documents or in a summary based on information in another summary or as to where paragraphs of his affidavit comprise conclusions (including conclusions that it is accepted may be characterised as submissions). The material so identified is in the Appendix to these reasons. (Where it indicates that a conclusion has been based on information summarised from and evident on the face of the underlying documents, it seems to me that there would not be a difficulty with its admission since the underlying basis for the conclusion is in evidence. Where it is a conclusion based on the application of judgment or otherwise and the process by which that conclusion was drawn was not evident or amounted to expert evidence, then there would be a difficulty.)
My conclusion on the material before me is that the document at tab 5 is a summary for the purposes of s 50 (as is the comparable document at 42 in relation to the Integrity fund and 85 in relation to the Destiny fund) but that tab 6 and the various other spreadsheets and schedules prepared by Mr Taylor and his staff reconciling information in the underlying documents or drawing conclusions as to the investments on the basis of those documents should be treated (at this stage at least) as submissions.
For completeness, I note that insofar as the Taylor summaries are based on business records obtained in the course of the liquidation, or otherwise from material obtained by Mr Taylor in his capacity as liquidator (such as the Investor Information Forms), Mr Clarke submits that any objection that those documents were not properly admissible because they are not business records or they are not documents from which these summaries could be properly derived is a submission that could be heard at the hearing (noting that in any event if ASIC is unsuccessful on this application it will be seeking to tender these spreadsheets as evidence of the amounts recorded therein as having been paid because, on their face, they are business records kept by those persons in relation to these schemes and would thus be admissible to prove the underlying matters that make up the summaries). I accept that, provided the information is summarised from underlying documents contained in the relevant DVD, the fact that those documents may have been obtained through the process of official enquiries as liquidator would not deprive the summaries of the character of summaries.
Similarly, insofar as Mr Taylor gives other reference to other sources of documents in paragraphs [21] to [23] and [24] and deposes that he then as part of his investigation sent notices to investors (at [25]), it is submitted by Mr Clarke that these notices and responses are part of the business records of the liquidation and (subject to any later objection as to their admissibility) the summary is properly admissible as summary evidence based on all of the underlying documents which can include the business records of the liquidation.
As to the third objection, which overlaps with the second, Mr Southwick made the submission by reference to the document at tab 5 that, by virtue of it being called a "reconstructed bank account", it could be inferred that it required some expertise to be compiled. Mr Clarke disputes this and submits that no particular expertise is required to list a record of what purports to be all of the payments into and out of a certain account and the dates upon which those payments occurred. The arithmetic total of those entries is said not to have required any particular expertise.
I accept that the extraction of all entries of payments described in a particular way in the underlying documents (and the addition of those amounts) would not involve any particular expertise. That said, in explaining how various schedules were compiled, there seems to be reference in the affidavit to steps taken which involve the application of an assessment or judgment as to how items recorded in the underlying documents are to be treated or interpreted or as to adjustments to be made to reconcile particular entries.
Insofar as what is being sought to be tendered is an opinion of an expert as to the characterisation of particular entries in the underlying documents or as to the reconciliation of particular accounts, that goes beyond the provision of a summary and would need to be dealt with in the ordinary way that opinions of that kind are to be proven. If there is an argument that this is an opinion that does not require expertise (such that the conclusion can be drawn from proof simply of the underlying facts) then this material could be dealt with by way of submissions at the hearing.
As to the final issue raised on this aspect of the matter, the question is whether the method of preparation of the summary tables (by which the particular entries were extracted from the main scheme spreadsheet for the respective schemes) deprives the summary tables of the character of summaries for the purposes of s 50.
Mr Clarke anticipated and addressed in his submissions a potential submission for the Hobbs interests that a summary table derived from another summary is itself a submission and not a summary of the contents of 2 or more documents for the purposes of s 50 of the Act. In this regard he submitted that, in circumstances where one can readily ascertain that the information in the summary tables is derived from the underlying documents, then the fact that it was prepared by a computer re-sorting the information on the ASIC Scheme spreadsheet (which is itself derived from the underlying documents), the summary tables satisfy the definition of a summary for the purposes of s 50.
My view is that provided the summary tables in fact summarise the contents of two or more underlying documents (as by definition they logically must do as they were themselves prepared from spreadsheets that did so), then the fact that as a practical matter they were derived by a process of extraction (by computer or manual re-sorting) from a larger and more comprehensive summary of the underlying documents does not preclude them being a summary for the purposes of s 50. "Summary" in s 50 is, in my view, a reference to the nature of the document not to the process by which it was prepared. (Again, if I were to be wrong in that conclusion, then the documents would be open to be treated as submissions as to the conclusions to be drawn from the information contained in the larger summaries, much as the summaries would have been treated in Thackray had her Honour found them not to be admissible as summaries, and I would so have treated them.)
Reasonable opportunity to examine/copy documents
At the outset I note that orders for discovery of documents in this matter were made by me on 11 February 2011 (at which time the Hobbs interests were also represented by Mr Southwick) when the matter had then come before me in the Corporations List. On that occasion, I ordered, inter alia, for ASIC's discovered documents to be made available for inspection by 22 April 2011. Therefore, it was submitted by Mr Clarke (in the context of considering the opportunity that the Hobbs interests had had to examine or copy the documents underlying the summaries) that by the time of the s 50 application, the Hobbs interests had had almost 12 months in which to inspect the documents the contents of which ASIC now seeks leave to adduce in evidence by way of the summaries in question.
However, the actual documents the subject of the present application were not physically received by the Hobbs interests or their then legal representatives in this jurisdiction until 10 and11 April 2012. Since then, there has been opportunity for Mr Saad to review the documents (so as to be in a position to make the criticisms that he had done) and for Mr Southwick also to do so. The fact that they seem to have ceased for all practical purposes to act in the matter from around 19 April 2012 does not mean that the Hobbs interests did not otherwise have a reasonable opportunity themselves to examine them in the month between 10 and11 April 2012 and 16 May 2012 or to engage other lawyers on their behalf to do so. (It should be noted that at least as at 17 April 2012, Mr Hobbs also seems to have had the benefit of assistance of a New Zealand solicitor with considerable familiarity with the matter, since that was the basis on which an application for leave to issue a subpoena to him to attend to give evidence in the proceedings was resisted.)
Moreover, what s 50 requires is an opportunity to examine or copy the documents - which suggests that the focus is on the party having the opportunity to see or to obtain the documents (not that the party must have had the opportunity to analyse them in detail over the relevant period).
I am satisfied on balance that this requirement was satisfied as at 16 May 2012 when the application finally came to be heard.
Conclusion
I will give leave pursuant to s 50 of the Act for ASIC to adduce as evidence of the contents of the underlying documents identified in Mr Connor's affidavit the summaries exhibited to Mr Connor's affidavit (as amended by reference to the material prepared by Mr Connor and annexed to his affidavit of 14 May 2012) other than the miscellaneous scheme spreadsheets and the Treasuries spreadsheets (in respect of which some exercise of judgment on calculation seems to have been involved), as well as to adduce as evidence of the underlying documents identified in Mr Taylor's affidavit the summaries being the Reconstructed Bank Account Schedules at tabs 5, 42 and 85 of the exhibits to Mr Taylor's affidavit. The remaining schedules to Mr Taylor's affidavit I am not presently persuaded to admit as summaries though it may be that, on the production of further evidence, my concerns in relation to some or all of them (and the remaining Connor spreadsheets) could be resolved. I note that ASIC has indicated an intention at the hearing to rely on the material for which leave under s 50 has not now been given as a submission and/or to tender the underlying documents said to have been summarised in those remaining schedules or spreadsheets.
I will make orders accordingly.
APPENDIX
A.Calculation in a summary based on underlying documents
The calculations undertaken by Mr Taylor based on primary documents in the nature of business records (including RBA exchange rates) and incorporated in summaries exhibited to his affidavit are identified in the following paragraphs in his affidavit:
56 (rows 127, 200, 210, 225, 285, 286, 300, 315, 366 only)
61 (running balances for the ISL Technocash account only)
99
104(c), (e), (f)
107(c)(ii), (e)(ii), (f)
111 (b), (d), (f)
113
118 (b)-(d)
120(a)
130 (excluding (f)(ii), (f)(iii)(A) and (f)(iv))
155 (rows 88, 102, 141, 146, 185, 189, 224, 229, 230, 243, 248, 249, 272, 274, 293, 300, 301, 343, 364, 369, 414, 415, 421, 441, 442, 454, 490, 500, 509, 533, 535, 562, 588, 590, 607, 618, 650, 651, 667, 669, 693, 694, 701, 702, 746, 747, 753, 756, 760, 783, 813, 814, 821, 865, 867, 877, 914, 923, 924, 946, 947, 957, 1008, 1009, 1014,1015, 1038, 1040, 1054, 1121, 1122, 1134, 1184, 1185, 1193, 1197, 1255, 1256, 1262, 1267, 1318, 1319, 1331, 1332, 1339, 1417, 1422, 1424, 1431, 1432, 1437, 1467, 1475, 1492, 1524, 1525, 1531, 1535, 1617, 1626, 1627, 1631, 1644, 1651)
160 (running balances only)
171 (total only)
172
177
185(f), (m)
186(b), (d), (e) (row 519 only), (f), (g) (row 540 only), (h)
188(b), (e), (h),(i), (l)(except row 40),(m),(n)
190(c)
205(a)
207-211
221(d),(e)
230
232-233
250
252(b).
B.Calculation based on information in another summary
The calculations undertaken by Mr Taylor and incorporated in summaries exhibited to his affidavit that are based on information contained in other summary schedules exhibited to his affidavit are identified in the following paragraphs of his affidavit:
65-66
69
72
131
137(d)
161-162
164
168
173-174
188(b)
205(g)
206
212-213
218
222(a)-(f)
223
246-247
252(b).
C.Summary containing information in another summary
The following paragraphs of Mr Taylor's affidavit refer to information contained in summaries that are exhibited to his affidavit where that information is taken from other summaries exhibited to his affidavit:
112(b)-(c)
117
137(a)-(c)
172
188(a)
205(d)-(e)
222(g).
D.Conclusions or submissions
The following paragraphs comprise conclusions (including conclusions that may be characterised as submissions) based on material that is specifically identified by Mr Taylor in his affidavit or comprise references to or commentary upon information included in the summaries exhibited to his affidavit in the form of conclusions (including conclusions that may be characterised as submissions):
71
74-75
77-78
80-81
83-84
86-87
89-92
96-98
119
136
138
165-167
176
179-180
182
185(l), (n)
188(o)
201
203
219
226
228
249
251
252 (a), (c)-(f).
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Decision last updated: 25 May 2012
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