Roach v Page (No 11)

[2003] NSWSC 907

CITATION:	Roach & Ors v Page & Ors (No.11) [2003] NSWSC 907
HEARING DATE(S):	4-8, 11-14, 18-21, 25-29 August 2003 1, 5, 9-12, 15-17 September 2003
JUDGMENT DATE:	10 October 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Sperling J at 1
DECISION:	See paragraph 3 of the judgment.
CATCHWORDS:	Evidence - Evidence Act 1995, s136 - meaning of "unfairly prejudicial" - where maker of representation not called - where ss 60 or 77 operate
LEGISLATION CITED:	Evidence Act 1995, s59, s60, s63 s64, s66, s69, s70, s76, s77, s135, s136, s137
CASES CITED:	ACCC v Australian Safeway Stores Pty Ltd [1999] FCA 1269 Clark (2001) 123 A Crim R 506 Commonwealth of Australia v McLean (1996) 41 NSWLR 389 Coyne v ANI Corporation Ltd (Carruthers AJ, 7 April 1998, unreported) Dann [2000] NSWCCA 185 GAC (Court of Criminal Appeal, 1 April 1997, unreported) Gordon (bankrupt) Official Trustee in Bankruptcy v Pike (Federal Court of Australia, Beaumont J, 1 September 1995, unreported) Kaperonis v GIO of NSW (Badgery-Parker J, 2 February 1996, unreported) Ordukaya v Hicks [2000] NSWCA 180 Papakosmas (1999) 196 CLR 297 Quick v Stoland Pty Ltd (1998) 87 FCR 371 Ringrow Pty Ltd v BP Australia Ltd [2003] FCA 933 Sing [2002] NSWCCA 20 Toki [2000] NSWSC 999 Vitali v Stachnik [2001] NSWSC 303
PARTIES :	Walter Edward Roach Sydtech Pty Ltd Winnote Pty Ltd Brian John Downey Page, Peter Eustace Hollingdale, Roderick McLeod, Warren Francis Asprey, Ian Farley Hutchinson, Brian Edmond Thornton, Thomas Owen Jones, Geza Francis Kim Santow, Robert Colin Nicholls, James Henry Graham, Peter Short, Phillip Thornton Taylor, Bruce Kelvin Cutler, David Myles Bennett, John Charles Mulally, Kevin William Broadley, James Michael Page, Peter John Carney, Patricia Helen Brown, Brian John McFadyen, Robert Andrew Channon, Peter John Perry, Douglas Michael Franc, Peter Stanley Ridout, Michael John Gray, Howard Keith Chillingworth Steele, Julian Block, Elizabeth A Nosworthy, Edward Joseph Wright, Claire Grose, John Hugh Clifford Colvin, Bryan David Weir, George Thomas Forster, John Lindsay Arthur, Roy Merrill Randall, Anthony Jospeh Muratore, Sir Clarence Waldemar Harders, Peter Campbell Church, Terence Michael Burke, Richard Stuart Gray, John Kevin O'Sullivan, Gregory Stephen Pearce, Rebecca Anne Davies, John Martin Green, Gordon David Cooper, Pamela Gaye Edwards, Stephen David Chipkin, Yukio Hayashi, Lucy Kathleen Farrell, Paul Ashley Cooper, Graham John Kelly, Barry Leon Barker, Philip John Christensen, Fabian Gleeson, Helen Irwin Wright, Iain Ronald Jones, Shaun Gerard McGushin, Mark Russell Cohen, Joanne Christine Seve, Amanda Jane Harkness, John Pierce Angus, Cornelius Daniel Neil Griffin, Murray John Dearberg, Marc Sandford Hutchinson, Timothy Mark Hirshman, Leon Pasternak, Kevin Alan Lewis, Donald Bruce Robinson, Michael Perrin Ryland, Richard Randolph Pearson, Geoffrey Howard Levy, Geoffrey Alan McLellan, David Jacob Hammerschlag, Gavin Terence Bell, John Gilbert Tabernar, Michael John Back, Georgina Margaret Gray, Raymond Unyuen Ming Kwok, Michael Orlov, Bettie Anne McNee - t/a Freehill Hollingdale & Page Brian David Kewley, Keith Alfred Robert Skinner, Jeffrey Stephen Kiddle, Denis James Davies, Davied Leonard Bailey, Martin Moule Hudson, Colin George Polites, Marcus Kirkland Fairbairn, John Alfred Emerson, James Macklin Pfeiffer, Russell David Allen, Peter Algernon Franc Hay, Paul Montgomery, John Balfour Blanch, Richard Geoffrey Eager, Peter Farley Mitchell, Peter Mark Butler, Simon Anthony Yencken, Rebecca Anne Davies, Paul Ashley Cooper, Peter William Stawell, Stephen Marcus Stern, John Lindsay Cooper, Graeme James Smith, Iain Ronald Jones, Rayne De Gruchy, Wayne McMaster, Graeme Ross Watson, Maxwell Douglas Ralph Cameron, Frank Barry, Irene Helen Zeitler - t/a Freehill Hollingdale & Page
FILE NUMBER(S):	SC 20950/97
COUNSEL:	Mr S Rares SC with Mr A Bell & Mr D Meltz for the Plaintiffs Mr A Meagher SC with Mr M Darke for the Defendants
SOLICITORS:	Maurice Blackburn Cashman for the Plaintiffs Allens Arthur Robinson for the Defendants

- 5 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
Professional Negligence List

Sperling J

Friday, 10 October 2003

20950/97 Walter Edward Roach & Ors v Brian John Downey Page t/a Freehill Hollingdale Page & Ors

Judgment No.11 – On admissibility of documentary evidence

1 His Honour: Shortly stated, the plaintiffs claim that the defendants negligently failed to advise them of the need to obtain an exploration licence or a mining lease under the Victorian mining legislation in order to secure an interest in a peat deposit in that state which they wished to exploit. The plaintiffs say that, in consequence, they lost the opportunity to exploit the resource when, in 1993, a third party obtained an exploration licence under the legislation in relation to the deposit. The value of the lost opportunity, if and insofar as the loss was caused by the defendants’ alleged breach of duty, is in issue.

2 This judgment relates to the tender of three documents:

(1) “Marketing Sales Plan 2001-2002”, Mr N Farnan, 29 July 2002;

(2) “Swan Marsh Peat Deposit Valuation”, Mr C Young, 1 January 2002;

(3) “Geology Survey Report 2002, Industrial minerals & rocks of Victoria”, I W McHaffie & R W Buckley, 1995.

3 I allowed the tender of the first and second documents but I limited their use so that, insofar as the document contained representations of fact and expressions of opinion, they would not be used as evidence of the truth of facts stated in them or as evidence of facts about the existence of which opinions were stated in them. I said I would give my reasons at a later time. (Where in making the rulings, I have said that a document would not stand as evidence of the facts and / or opinions stated in it, that should be taken as short-hand for the fuller formulation of the ruling which I have just recorded.)

4 I reserved my decision in relation to the third document. I now rule in the same way in relation to that document as in relation to the other two.

5 My decision in relation to all three documents involves s136 of the Evidence Act 1995. I will review the authorities and provide my understanding of the operation of s136 when I give my reasons for admitting but limiting the use of the first document.

“Marketing Sales Plan, 2001-2002”, Mr N Farnan 29 July 2002

6 Long before trial, directions were given that witness statements and expert reports were to be filed and served. In particular, the plaintiff had, before trial and pursuant to such directions, filed witness statements and expert reports in support of its case relating to the causation and quantum of damages.

7 Witness statements so filed included statements by Mr N Farnan who was, in the period 1999 to 2002, the general manager and chief executive officer of the company Peat Operations Pty Limited, later called Biogreen Pty Limited, which, by then, had acquired the right to exploit the deposit. As an exhibit to Mr Farnan’s statement dated 15 February 2002, the plaintiffs proffered a report dated 29 July 2001 prepared by Mr Farnan and entitled “Marketing and Sales Plan 2001-2002”. The report included information about how Biogreen was running its business, a market assessment for various peat products, and sales and costs projections. As such, it included representations of fact and opinion concerning the business and its prospects for profitable operation.

8 The defendants objected to the tender of the report on the ground that it was not relevant for any purpose in the proceedings.

9 I isolated for argument the question of whether the creation and existence of the report was a relevant fact. I did so because, if that were so, the effect of ss 60 and 77 of the Evidence Act 1995 was that the report would stand as evidence of the truth of the facts stated in it and as evidence of facts about the existence of which opinions were expressed in the document, notwithstanding s59 (the hearsay rule) and s76 (the opinion rule), subject only to any order limiting the use of the evidence pursuant to s136.

10 I ruled that the report was relevant as a publication and as evidence of Mr Farnan’s state of mind. My reasons for so holding were as follows.

11 Biogreen had been operating at a loss and continued to do so. The defendants would rely on that as evidence contributing to a finding that the Colac peat deposit would have been valueless in the plaintiffs’ hands. The plaintiffs would rely on the Biogreen experience as evidence (inter alia) of available markets for Colac peat and would seek to distinguish the way Biogreen sought to exploit the resource from the way it was said the plaintiffs would have done. A good deal of how Biogreen conducted the business would be relied upon by each side in different respects, and in different ways.

12 The report was relevant as a document which disclosed the understandings and intentions of management which, it could be inferred, would have contributed significantly to the way in which Biogreen conducted its business on an ongoing basis.

13 It followed that the report should be admitted into evidence and the representations of fact and opinion in it would then, by operation of ss 60 and 77, be evidence for all relevant purposes subject only to any limitation imposed on the use of the document pursuant to s136.

The statutory context

14 Section 60 of the Act provides that the hearsay rule (s59) does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of the fact intended to be asserted by the representation. Section 77 provides that the opinion rule (s76) does not apply to evidence of an opinion that is admitted because it is relevant for a purpose other than proof of the existence of a fact about the existence of which the opinion was expressed.

15 The document contained statements of fact which would not have been admissible under the hearsay rule but for s60. The document also contained statements of opinion which would have been inadmissible but for s77.

16 Sections 135, 136 and 137 of the Evidence Act 1995 are cognate provisions and provide as follows. (Only s136 is presently involved but relevant case law to which I shall refer relates to ss 135 and 137.)

135 General discretion to exclude evidence
The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:
(a) be unfairly prejudicial to a party, or
(b) be misleading or confusing, or
(c) cause or result in undue waste of time.
136 General discretion to limit use of evidence
The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might:
(a) be unfairly prejudicial to a party, or
(b) be misleading or confusing.
137 Exclusion of prejudicial evidence in criminal proceedings
In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant.

17 The phrase “probative value” has a defined meaning in the Act (not presently relevant). The phrase “unfairly prejudicial” is not defined.

18 The present case raises for consideration the proper ambit of the phrase “unfairly prejudicial” where a document goes into evidence because of its relevance and admissibility as a document created or used in a course of events but which contains statements of fact and / or opinion on which the party tendering the document wishes to rely for the truth of the statements of fact and / or for the opinions as a basis for the proof of facts.

The case law relating to “unfair prejudice”

19 In Gordon (bankrupt), Official Trustee in Bankruptcy v Pike, (Federal Court of Australia, Beaumont J, 1 September 1995, unreported), the Trustee in Bankruptcy, in seeking to set aside certain transactions, wished to establish that an aircraft was beneficially owned by the bankrupt. According to the respondent, the aircraft was owned by other parties. The Trustee tendered the transcript of an examination of the bankrupt under oath in which the bankrupt was asked whether he had owned an aeroplane of the particular type, to which he replied that he had. The bankrupt was not to be called. Whether he was not available to be called, so that s63 would apply, was in dispute.

20 By-passing the question of whether the evidence was admissible pursuant to s63, Beaumont J disallowed the evidence pursuant to s135. He held that the evidence was of minimal probative value (I think because it related generally to the ownership of such an aeroplane rather than to ownership of the particular aeroplane). The probative value of the evidence was outweighed by the danger of unfair prejudice to the respondent, because, as stated by his Honour,

it appears that the respondent would be significantly disadvantaged if unable to cross-examine the bankrupt on what is, on any view, a crucial issue in the litigation.

21 The decision is authority for the proposition that a party may be unfairly prejudiced if unable to test the truth of a representation by cross-examination.

22 In Kaperonis v GIO of NSW (Badgery-Parker J, 2 February 1996, unreported), the plaintiff claimed damages for injury received in a motor accident. The defendant sought to tender a recorded statement made by the defendant’s insured driver to a police officer. His Honour rejected the document pursuant to s135. His Honour said:

Shortly my reasons are that it would be in the circumstances of this case… unfair for the plaintiff to be deprived of the opportunity to cross-examine the witness. In that sense there is a danger of unfair prejudice.

23 In Commonwealth of Australia v McLean (1996) 41 NSWLR 389, as appears from the joint judgment of Handley and Beazley JJA (Santow AJA concurring), at 399-402, the plaintiff’s wife was permitted, pursuant to s64 of the Act, to give a hearsay account of events as relayed to her by the plaintiff. The plaintiff had given evidence without referring to those events. The wife’s evidence was allowed over objection, it having been submitted that the evidence should be disallowed pursuant to s135.

24 The defendant led evidence by eye witnesses contesting the facts as so recounted. The trial judge limited the use to be made of the plaintiff’s wife’s evidence, directing, pursuant to s136, that the evidence would not be used to impugn the reliability of the plaintiff’s wife as a witness because her reliability had not been challenged in cross-examination of her.

25 As appears from the following extract from the judgment, the ratio of the decision on appeal was that the trial judge erred in limiting the use that could be made of the defendant’s evidence. However, in the course of so ruling, their Honours made observations concerning the trial judge’s earlier ruling refusing to exclude the plaintiff’s wife’s evidence pursuant to s135. Their Honours said (at 401-2) in that regard:

The present difficulties have arisen because s64 read with s62 now allows first-hand hearsay. The first ruling allowed hearsay from Mrs McLean about events witnessed by the plaintiff as proof those events had occurred. The weight to be given to such evidence depends on the honesty and reliability of the person who made the representation, and the person giving the evidence.
A party against whom such evidence is tendered must be free to challenge any link in the chain, or the chain as a whole. It would be unfairly prejudicial within s135(a) for evidence to be tendered against a party who could not contest it.
…
The judge acknowledged the unprecedented difficulties in dealing with first-hand hearsay under the new Act and, with the wisdom of hindsight, the better course may have been to disallow the wife's evidence as hearsay.

26 In the first part of that passage, their Honours said that it would be unfairly prejudicial within s135 for evidence to be admitted against a party who could not contest it. In the circumstances of the case, the defendant was able to contest the truth of the evidence, and did so, by calling its own witnesses concerning those facts. However, the statement at the end of the quoted passage that the trial judge should perhaps have disallowed the wife’s evidence in any event necessarily implies that it would have been legitimate for the trial judge to have disallowed the wife’s evidence pursuant to s135, notwithstanding that the plaintiff had been called and could presumably have been recalled, if necessary, for cross-examination on the account of events allegedly given by him to his wife.

27 These observations were dicta, but they convey a view concerning the operation of s135 which commands respect.

28 In GAC (Court of Criminal Appeal, 1 April 1997, unreported) leave was given to the Crown Prosecutor to cross-examine a witness called for the Crown. In the course of the cross-examination, the witness acknowledged an electronically recorded interview with the police. The trial judge allowed the tender of the electronic record of the interview and of a transcript of it over the objection of counsel for the appellant. On appeal, one of the grounds of objection was that the tender should have been rejected pursuant to s135 or s137. No application had been made at the trial to limit the use of the evidence pursuant to s136 and there was no ground of appeal on that basis.

29 On appeal, the Court held that the record of interview was admissible pursuant to s66, being a prior inconsistent statement, that it then stood as evidence of the fact pursuant to s60 and that the trial judge was not bound to reject the evidence pursuant to s135 or s137.

30 Gleeson CJ (with whom McInerny and Sully JJ agreed) summarised the appellant’s argument in relation to ss 135 and 137 as being that, because of the witness’s professed inability to remember the events in question, counsel for the appellant was effectively denied the opportunity to cross-examine him about the content of the record of interview. The Court rejected that argument, in the circumstances of this case, on the ground that the witness had in fact been cross-examined by counsel for the appellant and had, in cross-examination, professed some memory for the events to the appellant’s advantage.

31 Notably, the Court did not suggest that inability in the opposite party to test the evidence was an irrelevant consideration under s135 and s137 as a matter of principle. If the Court had been of that opinion, one would have expected the appellant’s argument to have been rejected peremptorily on that ground.

32 In Coyne v ANI Corporation Limited (Carruthers AJ, 7 April 1998, unreported), Carruthers AJ rejected the tender of a report of injury form submitted by the plaintiff’s employer, to its insurers. The form included an account of the way in which the plaintiff received injury which tended to exculpate the defendant. The form was signed by a director of the employer company who was not present at the time of the accident, so the account in the document was hearsay. The document was tendered by the plaintiff pursuant to s69 (as a business record). Carruthers AJ was not satisfied that the document satisfied the provisions of that section.

33 Relevantly for the present purpose, his Honour went on to say that there were also significant reasons why the document could be rejected pursuant to s135. His Honour said it was a relevant matter that the author of the document was not called and that there was no explanation for that; and he cited, with apparent approval, the passage from Kaperonis which I have quoted above.

34 These cases provide a body of judicial opinion that the inability of the opposite party to test a representation by cross-examination of the person who made the representation may legitimately be held to constitute “unfair prejudice” notwithstanding that the evidence would otherwise be admissible to prove the truth of the representation under an exception to the hearsay rule.

35 Where s60 is involved, a further consideration is introduced. The following observations were made, albeit in obiter, in Quick v Stoland Pty Limited (1998) 87 FCR 371. Branson J said at 377-8:

It is not necessary in the context of this case to give detailed consideration to the circumstances in which, and the extent to which, evidence of the factual basis of an expert opinion will amount to evidence of the truth of that factual basis: cf Eastman v The Queen (1997) 76 FCR 9 at 78-79. It may be that a different result will follow depending upon the form in which the expert gives evidence of the factual basis of his or her opinion; that is, whether such evidence is given in the form of a representation or, alternatively, in the form of an identification of a hypothetical assumption. If s60 of the Act does operate to give mere form significance in this way, the result cannot be regarded as entirely satisfactory. In cases where there is a genuine dispute as to the relevant facts, it might be expected that a court would ordinarily limit the operation of s60 of the Act by exercising the power vested in it by s136 of the Act.

36 Finkelstein J said at 382:

In many cases the extraordinary effect of s60 would be unfair to the party against whom the evidence is tendered. For example, where the hearsay involves "facts" that are in conflict or "facts" that are unreliable it is quite unsatisfactory for those "facts" to be proved by the operation of s60. One way in which this problem can be overcome is by an order under s136 limiting the use to be made of that evidence. In the case of evidence given by an expert, he or she can be required to express his opinion in answer to a hypothetical question leaving it to the party calling the expert to prove the facts upon which the opinion is based.

37 According to these opinions, where hearsay representations of fact are included in a document as the basis for an expert opinion stated in the document and the facts so represented are contentious, there is a strong case for limiting the use of such representations to their role as assumptions on which the opinion is based. That the representations in the document have become evidence of the facts stated by the fortuitous circumstance that they provide the basis for an expert opinion is seen as an imposition on the opposite party amounting to unfair prejudice.

38 By parity of reasoning, the same circumspection should apply where a document admitted into evidence as part of a relevant course of events is relied upon as evidence and opinions of the facts stated in it pursuant to ss 60 and 77. That is particularly so where the opposite party cannot test the truth of the representations by cross-examination, or where the basis of the opinion is not adequately disclosed.

39 This situation is to be contrasted with what might be regarded as the paradigm case for the application of s60, where evidence of complaint in sexual assault prosecutions is made evidence of the fact. There, the complainant is ordinarily called as a witness so that the truth of the representation in the complaint may be tested by cross-examination of the complainant. Section 60, in such a case, avoids the need for nice distinctions to be made unnecessarily.

40 Papakosmas (1999) 196 CLR 297 was such a case. The appellant had been convicted of sexual intercourse without consent. Evidence was led at the trial of complaint made shortly after the event. In his directions to the jury, the trial judge treated the evidence of complaint as evidence of the facts complained of by operation of s66. That section provides for an exception to the hearsay rule in criminal proceedings where the person who made the representation has been or is to be called and the evidence of the representation is given by that person (or by a person to whom the representation was made) and the occurrence of the asserted fact was fresh in the memory of the person when the representation was made.

41 A s66 case is not fertile ground for the application of s136 where the maker of the representation is called as a witness. It would have to be an unusual s66 case of that kind for there to be a danger of unfair prejudice to the opposite party arising from the operation of s60. Nonetheless, one of the grounds of appeal in Papakosmas was that the trial judge should have limited the use of the evidence pursuant to s136 so that it could not be used as evidence of the truth of the complaint.

42 In their joint judgment, Gleeson CJ and Hayne J said, at [38-41]:

[38] Counsel went so far as to argue that, as a general rule, a court which receives evidence of complaint in any criminal case should limit its use under s136 so that it is not used for a hearsay purpose.
[39] The submissions must be rejected. They amount to an unacceptable attempt to constrain the legislative policy underlying the statute by reference to common law rules, and distinctions, which the legislature has discarded.

[40] There may well arise circumstances in which a court, in the exercise of a discretion enlivened by the requirements of justice in the facts and circumstances of the particular case, will see fit to limit the use of complaint evidence, and, in some instances, it may be appropriate to effect that limitation in a manner which corresponds to the previous common law. To assert a general principle of the kind for which the appellant contends, however, would be to subvert the policy of the legislation.

[41] In the instant case, the facts and circumstances surrounding the complaint were not such as to make the use of the evidence for a hearsay purpose either unfairly prejudicial to the appellant, or misleading or confusing. The recency and spontaneity of the complaint, and its consistency with other aspects of the complainant's appearance and demeanour, meant that it was not unfairly prejudicial. There is nothing to suggest such evidence was either misleading or confusing in its use for a hearsay purpose.

43 Gaudron and Kirby JJ, at [44], agreed with the reasons for decision given by Gleeson CJ and Hayne J (with an exception not presently relevant).

44 It may be noted that the general proposition was endorsed (in [40]) that there may well be cases in which even the use of complaint evidence should be limited so that it does not stand as evidence of the facts stated in the complaint.

45 McHugh J said at [91-94, 97-98]:

[91] Evidence is not unfairly prejudicial merely because it makes it more likely that the defendant will be convicted. In R v BD (1997) 94 A Crim R 131 at 139 (emphasis in the original), Hunt CJ at CL pointed out:
The prejudice to which each of the sections [ss135, 136 and 137] refers is not that the evidence merely tends to establish the Crown case; it means prejudice which is unfair because there is a real risk that the evidence will be misused by the jury in some unfair way. (Footnote omitted.)
[92] In its Interim Report, the Australian Law Reform Commission [Australian Law Reform Commission, Evidence, Report No 26 (Interim) (1985), vol 1, par 644] explained:
By risk of unfair prejudice is meant the danger that the fact-finder may use the evidence to make a decision on an improper, perhaps emotional, basis, ie on a basis logically unconnected with the issues in the case. Thus evidence that appeals to the fact-finder's sympathies, arouses a sense of horror, provokes an instinct to punish, or triggers other mainsprings of human action may cause the fact-finder to base his decision on something other than the established propositions in the case. Similarly, on hearing the evidence the fact-finder may be satisfied with a lower degree of probability than would otherwise be required.
[93] Some recent decisions suggest that the term "unfair prejudice" may have a broader meaning than that suggested by the Australian Law Reform Commission and that it may cover procedural disadvantages which a party may suffer as the result of admitting evidence under the provisions of the Act. See Einstein, “’Reining in the judges’? — An examination of the discretions conferred by the Evidence Acts 1995", University of New South Wales Law Journal, vol 19 (1996) 268, at pp 273-274 . In Gordon (Bankrupt), Official Trustee in Bankruptcy v Pike [No 1] (Unreported; Federal Court of Australia; 1 September 1995); but see Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 at 434-436, per Wilcox, O'Connor and Sackville JJ, a decision of the Full Court of the Federal Court , Beaumont J used his discretion under s135(a) to exclude the transcript of a bankrupt, which would otherwise have been admitted as an exception to the hearsay rule pursuant to s63, on the basis that the prejudicial effect of being unable to cross-examine the maker of the representation on a crucial issue in the litigation substantially outweighed the probative value of the evidence. In The Commonwealth v McLean (1996) 41 NSWLR 389 at 401-402, per Handley and Beazley JJA, Santow A-JA agreeing , the New South Wales Court of Appeal also used s135(a) to exclude hearsay evidence otherwise admitted via the exception contained in s64 on the basis that the defendants were prevented by other evidentiary rulings from effectively challenging the evidence. It is unnecessary to express a concluded opinion on the correctness of these decisions, although I am inclined to think that the learned judges have been too much influenced by the common law attitude to hearsay evidence, have not given sufficient weight to the change that the Act has brought about in making hearsay evidence admissible to prove facts in issue, and have not given sufficient weight to the traditional meaning of "prejudice" in a context of rejecting evidence for discretionary reasons.
[94] As Hunt CJ at CL and Bruce J pointed out in R v BD (1997) 94 A Crim R 131 at 140, per Hunt CJ at CL; at 151, per Bruce J , it is artificial and wrong to admit evidence pursuant to s66(2) and then limit the use of the evidence to credibility issues by exercising the power conferred by s136. In the ordinary case, a warning under s165 should be sufficient to alert the jury to the dangers of hearsay evidence. For that reason, s136 should only be invoked in cases where the danger could not be cured by such a warning [ R v BD (1997) 94 A Crim R 131 at 139-140, per Hunt CJ at CL; at 151, per Bruce J].
…
[97] Sections 135, 136 and 137 contain powers which are to be applied on a case by case basis because of considerations peculiar to the evidence in the particular case. It may be proper for appellate courts to develop guidelines for exercising the powers conferred by these sections so that certain classes of evidence are usually excluded or limited [see Norbis v Norbis (1986) 161 CLR 513 at 517-520, per Mason and Deane JJ; cf at 536-538, per Brennan J] . But those sections confer no authority to emasculate provisions in the Act to make them conform with common law notions of relevance or admissibility.
[98] Nothing in the present case required the judge to exercise the power conferred by s136. Indeed, the learned judge would have exercised his discretion erroneously if he had limited the use of the complaint evidence to the credibility issue.

I should note that (as will have been apparent) his Honour’s reading of what was decided in that case does not accord with my reading of the decision (the difference in reading is not, however, material to the tenor of his Honour’s remarks).

46 I would make the following respectful observations concerning the quoted passages in his Honour’s judgment. First, whilst the foregoing remarks by McHugh J must be accorded great respect, they are not binding precedent, being largely obiter and the opinion of a single judge with which other members of the court did not express agreement.

47 Secondly, while expressing his views on the topic in strong terms, his Honour stopped short of saying that the decision in Gordon was wrong or that what was said in McLean was wrong. Although his Honour cited what was said in the ALRC report, his Honour did not say that unfair prejudice should be confined to the kind of case mentioned there.

48 Thirdly, his Honour was dealing with hearsay evidence admitted under s66. It may be doubted that his Honour would have spoken in such strong terms where a representation in a document is made evidence of the truth of the representation by reason only of the fortuitous circumstance that the document containing the representation is admissible as part of a course of events and the truth of the representation cannot be tested.

49 The statements by McHugh J in Papakosmas do not appear to have had much effect on the course of authority in circumstances where the opposite party is not able to test the truth of the representation.

50 In ACCC v Australian Safeway Stores Pty Ltd [1999] FCA 1269, Goldberg J declined to reject the tender of two invoices pursuant to s135. This was a Trade Practices case. The invoices were evidence of the supply of bread at certain prices to a particular customer on the specified occasions.

51 The circumstance relied on in that case as unfair prejudice had nothing to do with the hearsay aspect of the evidence or the opposite party’s inability to test it. Indeed, it was not suggested that the facts evidenced by the invoices were contentious. The submission in relation to prejudice was that it had not been put to Safeway’s witness that the company had engaged in other conduct involving another customer which was part of the ACCC’s case against Safeway and which provided the only nexus with the invoices.

52 The decision is remote from the present case. However, in the course of his judgment, Goldberg J referred with apparent approval to the following passage from Odgers, Uniform Evidence Law, 3rd edition, at p 443:

Plainly, it is likely that this ‘danger’ will usually only have significance in a jury trial. Where the trial is by a judge without a jury, it will be an unusual judge or magistrate who is prepared to concede that a danger exists that he or she might be ‘unfairly prejudiced’ by evidence. On the other hand, the provision is not limited to misuse of the evidence by the Tribunal of fact. Unfair prejudice may arise from procedural considerations. Thus an opposing party may be significantly prejudiced by hearsay evidence if unable to cross-examine on a crucial issue in the litigation. Alternatively, the opposing party may be unfairly prejudiced by evidence if prevented from properly challenging its reliability.

He also quoted from the judgment of McHugh J in Papakosmas , to which I have referred, but the citation from Odgers carries the implication that inability to test the truth of a representation otherwise admissible may constitute unfair prejudice and warrant rejection of the evidence.

53 In Dann [2000] NSWCCA 185, it was held by the Court of Criminal Appeal that evidence of other episodes led as “relationship” evidence should have been rejected under s137. Heydon JA (Spigelman CJ and James J agreeing) said:

[37] In my judgment the evidence ought to have been rejected under s 137 also. Its low probative value was exceeded by the unfairness caused by a multiplication of questionably established discreditable instances. Though the jury were warned not to use the evidence as tendency evidence, only as relationship evidence, the distinction is difficult to grasp at the best of times. The vagueness of the evidence, particularly as to date, made it prejudicial in the sense that it was difficult for the accused to respond to it except by a denial.

54 The case illustrates the breadth of considerations which may provide a legitimate basis for a finding of unfair prejudice. The considerations taken into account in Dann were quite different from the kind of unfair prejudice referred to in the ALRC report as quoted by McHugh J in Papakosmas.

55 In Ordukaya v Hicks [2000] NSWCA 180, the trial judge had admitted into evidence a statutory declaration made by the defendant pursuant to s64 of the Act, the defendant being 92 years of age at the time of the trial and it having been found that it was not reasonably practicable to call the defendant to give evidence. He declined to reject the evidence pursuant to s135.

56 It was argued at the trial and on appeal that the evidence should have been rejected on the ground of unfair prejudice because the plaintiff was denied the opportunity to cross-examine the defendant. Sheller JA rejected that argument. He emphasised that, conformably with s64, the hearsay rule did not apply to the statement. He recorded the plaintiff’s reliance on the dicta in McLean that it would be unfairly prejudicial within s135 for evidence to be tendered against a party who could not contest it. He quoted what was said by McHugh J in Papakosmas at [93], and he quoted the passage in the ALRC report cited by McHugh J. Sheller JA said, at [38]:

The purpose of s64 is to remove the obstacle of the hearsay rule in cases like the present where a party, due to age and ill health, is unable to give evidence and may suffer great injustice as a consequence. Inevitably the removal of the hearsay rule as an obstacle to admitting the statement carries with it prejudice to the other party.

57 I have to say that the appellant’s argument in Ordukaya was, it seems to me, a hopeless cause. The only point the appellant appears to have had was that the truth of the representation could not be tested because it was not reasonably practicable to call the maker of the representation. But that was the very basis on which hearsay evidence was made admissible in that case, by operation of s64. The submission that the evidence should then be disallowed on the ground of unfair prejudice was inconsistent with the policy underlying s64. The case demonstrates the need to distinguish between considerations which may legitimately arise in relation to unfair prejudice depending on how the hearsay evidence becomes admissible.

58 Sheller JA went on to speak of the concept of irresponsibility behind the common law attitude to hearsay evidence, that is, the making of a statement without the sense of responsibility associated with giving evidence on oath. He said, at [39]:

The irresponsibility referred to endures when, in the particular circumstance that it is impracticable for the witness to be called, the legislature provides that the hearsay rule is not to apply. But I do not think that it can be said that such irresponsibility makes the prejudice unfair to the point of outweighing material of high probative value such as this statutory declaration.

However, Sheller JA then went on to say in relation to s135, in the same paragraph:

It is not necessary in this case to decide whether it ever could or whether it is confined to situations, like those in the cases to which I have referred, where the statement has been obtained by unfair means or has a tendency wrongly to excite the fact finder's emotions and is of little probative value.

So the proper ambit of “unfair prejudice” was left open.

59 Meagher JA agreed with Sheller JA. So did Mason P, but in a short supplementary judgment, Mason P made some observations of his own. At [6], he referred to a real risk that the evidence will be misused in some unfair way in a jury trial as being the “core notion” of unfair prejudice within the meaning of the Act. However, he then went on to quote the passage from Odgers referred to earlier. His Honour said he agreed with that passage, thus endorsing the proposition that the opposite party may be significantly prejudiced by hearsay evidence if unable to cross-examine on a crucial issue or if prevented from properly challenging its reliability.

60 Mason P also cited with apparent approval the decision in Safeway, referred to above.

61 In Vitali v Stachnik [2001] NSWSC 303, Barrett J, sitting at first instance, refused to reject evidence otherwise admissible pursuant to the business records provisions of s69 of the Act, tendered to establish that certain payments had been made. His Honour said [at 22]:

The trend of recent authority is, I think, against my exercising my discretion under s.135(a) to reject MFI 3 in this case. That authority lays particular emphasis on the adverb "unfairly" in the phrase "unfairly prejudicial". I refer in particular to the judgment of McHugh J in Papakosmas v The Queen (1999) 196 CLR 297 and the judgment of Sheller JA (in which Meagher JA concurred) in Ordukaya v Hicks [2000] NSWCA 180. In the latter case, as in ACCC v Australian Safeway Stores Pty Ltd [1999] FCA 1269, there was approval of the notion that inability to cross-examine on material sought to be introduced is not of itself unfairly prejudicial, at least in civil proceedings where there is no jury, even though that inability may well be a very relevant consideration in the Court's decision as to the weight it should ultimately afford to the evidence (see also R v Toki [2000] NSWSC 999).

62 I have to say, with respect, that I disagree with his Honour’s perception of a trend of authority, particularly when appropriate distinctions are recognised between the ways in which hearsay evidence may become admissible. I have also to say, with respect, that I do not read Ordukaya or Safeway as standing for the proposition mentioned by his Honour. As for Toki [2000] NSWSC 999, that was an interlocutory decision by Howie J, declining not to exclude relationship evidence pursuant to s137 in a criminal trial. Inability to test hearsay evidence by cross-examination did not arise for consideration in that case.

63 In Clark (2001) 123 ACrimR 506, the appellant had been found guilty of murdering the deceased. At the trial, evidence was led from a number of witnesses of conversations between them and the deceased, concerning the relationship between the appellant and the deceased. The evidence was admissible pursuant to s65. The trial judge refused to exclude the evidence under s135 and was, according to Heydon JA, to be taken to have refused to exclude the evidence pursuant to s137 or to limit its use pursuant to s136.

64 Heydon JA held there had been no error in that regard and said, at [164]:

The appellant submitted that the trial judge should have exercised his discretion under s135 to exclude the evidence. The evidence was not misleading, confusing or wasteful of time. It was adverse to the appellant's interest, but not unfairly so. The appellant said that the evidence was "so significantly prejudicial and so impossible to challenge its veracity that it is wrong to permit it". The witnesses to the deceased's statements were all there for cross-examination. There was in fact very little cross-examination on the evidence complained of. The appellant was there to deny having said or done any of the things attributed to him and, credibly or not, he did deny most of them. The deceased was not there for cross-examination, but if the impossibility of challenging the veracity of hearsay statements by non-witnesses were generally to justify, or were often to be a significant factor in justifying, a decision to exclude evidence in the court's discretion under s135 or by reason of a finding of "unfair" prejudice under s137, the result would be to write the hearsay exceptions out of the Act to a large extent.

His Honour went on to quote the passage from McHugh J’s judgment in Papakosmas to which I have referred.

65 Bell J agreed with Heydon JA. Dowd J took issue with some aspects of Heydon JA’s judgment, but, in broad terms, agreed generally with Heydon JA’s approach in substance.

66 I would make the following observations concerning Heydon JA’s judgment. First, like Ordukaya, this was a case falling within an exception to the hearsay rule designed to allow evidence to be tendered of representations made by a person who, because of death or other reasons, cannot be called to give evidence as a witness. Section 64 and 65 accordingly necessarily contemplate that a representation may stand untested by cross-examination.

67 Secondly, even in that kind of case, Heydon JA did not lay down any hard and fast rule. The words “generally” and “often” are to be noted.

68 Thirdly, as noted by Heydon JA, at [166], the evidence complained of was not significantly more prejudicial than other evidence to the same effect of which the appellant did not complain (and, I would add, could not have complained), so that to exclude the evidence complained of, but not the other evidence, would have been to leave the jury (as Heydon JA put it) with vague and generalised evidence about the appellant’s state of mind, but not specific evidence about it.

69 In Sing [2002] NSWCCA 20, two expert witnesses gave evidence at a criminal trial concerning DNA tests carried out under their supervision. On appeal, it was argued that the evidence should have been rejected under s135 or its use limited under s137.

70 On appeal to the Court of Criminal Appeal, Hodgson JA assumed for the purpose of the argument that the evidence involved hearsay or was based on hearsay. He said,

[34] Whatever is the correct answer to the hearsay question, I think there is substance in the appellant's complaint that to admit evidence like that of Mr Weigner and/or Mr Goetz over objection, without the evidence from the persons who actually carried out the procedures that resulted in the print-outs, and indeed without any evidence that there was any difficulty in calling these persons, involved unfair prejudice to the appellant. It may be that these persons would have no recollection of exactly what they did and would have to rely on records; but that is not generally sufficient justification for not calling, in a criminal prosecution, a witness involved directly in a significant part of the prosecution case.
[35] Counsel for the appellant at the trial said he had an expert present in court for the purpose of assisting him with questions to be put to the persons who actually carried out the procedures, and I think this Court should proceed on the basis that there were relevant questions which the appellant's counsel wished to put to these persons if they had been called. There is an obligation on the prosecution to call available witnesses of events alleged to constitute the offence and of essential parts of the prosecution case, at least unless there is some justification for not doing so: see for example R v Kneebone [1999] NSWCCA 279. I think this does extend to witnesses such as those in this case dealing with important links in the prosecution case. Particularly since DNA evidence can be so compelling, I do not think the matter of the correct carrying out of testing procedures should normally be proved, over objection, merely by evidence of the existence of the procedures and the giving of instructions, and otherwise left to inference. If for any reason the persons who actually did the work are unavailable, there may be justification for such a course. But there is no suggestion of that here.
[36] For those reasons, even if the evidence of Mr Weigner and Mr Goetz were admissible, notwithstanding the possibility of hearsay, in my opinion it should have been excluded under s135 or s137 of the Evidence Act.

Levine and Howie JJ agreed with Hodgson JA.

71 Considerations particular to a criminal trial were involved. But this is, nonetheless, an instance of hearsay evidence being held to warrant rejection under s135 or limitation under s137 on the ground that the opposite party does not have the opportunity to test the evidence by cross-examination, at least where the persons with direct knowledge could be called.

72 In Ringrow Pty Ltd v BP Australia Ltd [2003] FCA 933, Hely J refused to admit two valuation reports into evidence in reliance upon s135. The valuations had been prepared on instruction by a bank which was a stranger to the proceedings. It was an issue between the parties as to whether there was any valuable goodwill in relation to the service station business which was the subject of the proceedings. Arguably, the reports were evidence tending to establish that there was such goodwill. It was not proposed that the authors of the valuations would be called as witnesses.

73 Hely J held that, subject to s135, the reports should be admitted as satisfying the business records provisions of s69. However, the evidence was rejected pursuant to s135. In so holding, his Honour said,

[27] Whilst inability to cross-examine ordinarily goes to weight, rather than to admissibility, in my view each of pars [a], [b] and [c] of s135 would be enlivened if the valuation reports were admitted into evidence.


That holding in principle is pertinent. Its application to the case involved detail which renders further study of the decision unproductive for present purposes.

Considerations relevant to “unfair prejudice”

74 Having regard to the terms and context of ss 135, 136 and 137 and the case law to which I have referred, I set out my view of considerations relevant to “unfair prejudice” as follows.

(a) To say that any prejudice must be unfair prejudice is to state the obvious.

(b) The phrase “unfair prejudice” is not defined. The legislature imposed no restriction on the criteria for unfairness.

(c) The exceptions to the hearsay rule evince a legislative intention to allow evidence notwithstanding its hearsay character. But ss 135, 136 and 137 evince a legislative intention to allow any evidence, otherwise admissible, to be rejected or its use to be limited if the conditions specified in those sections are met.

(d) Where hearsay evidence is made admissible by an exception to the hearsay rule it would be wrong to exclude it or to limit its use merely because it is hearsay and therefore of inherently less reliable quality. That would be to frustrate the intention of the legislature in making hearsay evidence admissible where it is covered by an exception to the hearsay rule. But that is not the same as saying that there is scope for the application of ss 135, 136 and 137 in relation to hearsay evidence which is covered by such a statutory exception but where there is some additional factor, for example, where the maker of the representation is not to be called.

(e) Inability to test the truth of the representation is a legitimate ground for rejecting or limiting the use of evidence which is covered by an exception to the hearsay rule. Thus, whether the maker of the representation will be called as a witness is a relevant consideration.

(f) However, where hearsay evidence is admissible under an exception to the hearsay rule because of the unavailability of the maker of the representation, there is a special reason for not disallowing the evidence or limiting its use on the ground that the evidence cannot be tested by cross-examination. That is because the legislature has made the evidence admissible notwithstanding that consideration.

(g) Conversely, where the maker of the representation is available or is not shown to be unavailable and the party tendering the evidence does not call the person, that is a legitimate consideration in favour of a finding of unfair prejudice.

(h) Sections 60 and 77 give rise to special considerations. Unlike other exceptions to the hearsay rule and the opinion rule, it is not the objective of those sections to facilitate proof. They are there to avoid a distinction having to be made about evidence being used for one purpose and not for another. Where a document goes into evidence because the existence of the document is a relevant fact, the operation of these sections without a limiting order under s136 may have a consequence which the legislature cannot have intended. Any representation in the document which is probative of some other element in the tendering party’s case becomes evidence of the content of the representation. Representations of fact become evidence of the truth of the representation, irrespective of whether they are first-hand or remote hearsay and irrespective of whether the source of the information is disclosed. Representations of expert opinion in the document are probative of whatever is the subject of the opinion expressed, irrespective of whether the author of the document is qualified to express the opinion and irrespective of whether the assumptions made for the purpose of expressing the opinion are specified. Such consequences cannot have been intended where the opposite party is disadvantaged by such consequences. Section 136 serves to avoid such unfairness.

(i) Where ss 60 or 77 operate and the author of the document is not called, the truth of facts stated or the efficacy of the opinion expressed cannot be tested by cross-examination. The consequence of the operation of ss 60 or 77 is then potentially the more unfair on that account.

(j) The operation of s60 on assumption evidence which is given as the basis for an expert opinion is also a special case. Where such evidence is in the form of a bare statement of facts or where facts are stated as having been provided by some other person or persons, s60 operates to make the account evidence of the truth of the facts so stated. That is not so if the expert says that certain facts are assumed for the purpose of providing the opinion. A disadvantage should not be incurred in legal proceedings by happenstance. If the facts stated are contentious, it will ordinarily be unfair that the opposite party is fixed with assumption evidence as evidence of the truth of the facts stated by reason of those facts having been stated in one form rather than the other.

Rulings

75 The defendants applied for rulings limiting the use to be made of certain passages in the Marketing and Sales Plan document to the effect that the document would not stand as evidence of the truth of the facts stated and / or as evidence of facts to the existence of which opinions expressed in the document related.

76 The passages and the rulings which I made were as follows:

Passage number	Passage	Report page number	Ruling
1	An approximately bulk density of 2m3 per 1mT is considered average for these products [dark peat products].	4	Limited as sought
2	An approximately bulk density of 8m3 per 1mT is considered average for these products [sphagnum peat products].	4	Limited as sought
3	Biogreen Peat’s product attributes and performance indicators are comparative with imported dark peat.	5	Limited as sought
4	The bulk density of this product [imported coir] is approximately 13.75m3 per 1mT.	6	Limited as sought
5	Mushroom yield for the year 2000 was approximately 40,000mT.	9	Not limited
6	A typical range of 20% to 45% of blended casing mix requires a dense grade product like Biogreen peat.	9	Not limited
7	Exhibit 10 summarises mushroom grower preference by media type. Although 34% buy pre-mix casing blends, only 5% are committed to purchasing only a pre-mixed product. These 5% of growers have expressed interest in a Biogreen blended casing mix. Approximately 52% of growers blend their own casing mix under all circumstances.	9-10	Not limited

77 In the case of passages 1 to 4 inclusive, I was of the opinion that there was a danger that use of the evidence in these passages as evidence of what was represented might be unfairly prejudicial to the defendants in the following respects.

(i) It was not clear whether these passages should be categorised as factual or opinion evidence.

(ii) If factual, the maker of the representation, Mr Farnan, was to be called. But, in the case of passages 1 and 2, it was apparent that he was not the source of the information as to the bulk density of the products. The information was unsourced (“considered” by whom?). In the case of passages 3 and 4 it was not apparent that Mr Farnan was the source of the information. It followed that the plaintiffs were not assured of an opportunity to test the truth of these statements by cross-examination.

(iii) This was not a case where the evidence was admissible under an exception to the hearsay rule predicated upon the unavailability of the true author of the representation (that is, the unidentified source).

(iv) Section 60 operated to make representations of fact in the document evidence of the fact. As such, this was not evidence of a kind likely to have been in contemplation by the legislature when enacting s60, not being evidence of any previous representation given by a live witness who was amenable to be cross-examined as to the truth of the representation. (Again, because Mr Farnan was not identified as the source of the information, there could be no assurance of a real opportunity to test the truth of the representations by cross-examination.)

(v) Treated as evidence of opinion, the basis of the opinion in passages 1 to 4 was not disclosed.

(vi) It would not have been fair to the defendants to put them to the choice of not cross-examining and submitting that the opinions were of little weight without disclosure of the basis for them or, alternatively, cross-examining with the risk of making a better case for the plaintiffs.

(vii) Mr Farnan was not shown to be qualified to present the opinions.

(viii) Without a limiting ruling pursuant to s136, opinion evidence, with no disclosed basis for the opinions and propounded by a person not shown to be qualified, would stand as evidence of the facts the subject of the opinions by reason of the fortuitous circumstance that the opinions were in a document admissible for some other reason. This was not the kind of case likely to have been contemplated by the legislature when enacting s77.

(ix) If allowed as evidence of fact or opinion and shown by cross-examination to be of little weight, the evidence could nonetheless throw an evidentiary burden of proof onto the defendants.

78 In the case of passages 5 to 7 inclusive, I was not of the opinion that there was a danger that use of the evidence in these passages as evidence of what was stated might be unfairly prejudicial to the defendants. The following considerations were material.

(i) The passages related to the mushroom growing industry which, on the evidence, was a major consumer of Biogreen’s product. The evidence established that Mr Farnan had specialised knowledge of that industry acquired as general manager and chief executive officer of Biogreen, which could reasonably be regarded as the source of the information in these passages.

(ii) Mr Farnan was to be called and could be cross-examined in relation to those matters.

(iii) Further as to passage 5, I was aware that statistical evidence was available concerning mushroom production so that this information could be challenged and answered if it was wrong.

(iv) Further as to passages 6 and 7, I was aware that evidence was to be adduced by the defendants from mushroom growers. So the defendants would have the opportunity of providing more direct evidence of these matters if they were disputed and were of importance.

“Swan Marsh Peat Deposit Valuation”, Mr C Young, 1 January 2002

79 The plaintiffs tendered a report “Swan Marsh Peat Deposit Valuation, 1 January 2002” by Mr C Young. The report valued the peat deposit which is the subject of these proceedings at $7.5m.

80 I held that the report was admissible as a document. The document had been used to support the value of Biogreen’s assets in its financial statements for the year ended 30 June 2001 (published after January 1992). As such, it was relevant to the capacity of a company such as Biogreen to carry on the business of extracting and marketing the peat. It had also been available for use to interest investors and lenders. It was in fact used to interest one particular company which invested in the project.

81 The only serious question about admissibility was whether the use of the document should be limited pursuant to s136 so as to prevent its use as evidence of the facts and opinions stated in it.

82 I was satisfied that use of the document as evidence of the facts and opinions stated in it would give rise to a danger of unfair prejudice to the defendants. I limited the use of the document accordingly. The following are my reasons.

(i) The author of the report, Mr Young, was not to be called. The defendants would accordingly not have the opportunity of testing his opinion by cross-examination. There was no evidence that Mr Young was not available to be called and no explanation was offered for not calling him as a witness.

(ii) Mr Young’s qualification as an expert with relevant specialised knowledge or experience were not apparent. He was described as a consulting geologist on the front sheet of the report. The more detailed statement of his qualifications in the report was ambiguous in an important respect. It was not clear whether he had training or experience in the valuation of mining projects, as distinct from evaluating mineral deposits from a strictly geological viewpoint, that is, the evaluation of the size and quality of deposits and perhaps the practicalities of extraction.

(iii) Mr Young valued the deposit on a discounted cash flow basis. That was based on “target market estimates” the basis for which was not disclosed. These were said to be “in line” with estimates provided by Biogreen. That source appears to have been a marketing and sales plan report written by a Ms K Sommers, an employee of Biogreen. The plaintiffs did not intend to call Ms Sommers or to tender her report. So fundamental assumptions underlying Mr Young’s report would not be exposed for evaluation and the defendants would not have the opportunity of testing them.

(iv) The reasoning in the report was opaque in several respects. For example, Ms Sommers had apparently based her estimates on a short-term projection which she extended for a period of 20 years, with estimated increases in production and sales referred to as “ramp-up”. Mr Young varied Ms Sommers’ ramp-up factors to provide a more conservative estimate of prospective nett income over the 20 year period. The rationale for Ms Sommers’ ramp-up factors and for Mr Young’s adjusted ramp-up factors was not disclosed in Mr Young’s report.

(v) But for the operation of ss 60 and 77 the report would not have been admissible as evidence of the facts and / or opinions stated in it. This was not the kind of case which the legislature was likely to have had in contemplation when enacting those provisions. Evidence of the value of the deposit – a matter at the core of the proceedings – would be admitted against the defendants by the fortuitous circumstance that the valuation report was relevant and admissible for other reasons.

“Geology Survey Report 102, Industrial minerals & rocks of Victoria”, I W McHaffie & R W Buckley, 1995

83 It is common ground that the report is a publication of the Victorian government, authored by employees of the Geological Survey, being an office within the Department of Agriculture, Energy and Minerals, which was published in 1995 and which has been available as a government publication.

84 In relation to peat the document conveyed an encouraging outlook for the exploitation of peat deposits in Victoria and, in particular, of the deposit which is the subject of these proceedings. As such, the report was relevant as a document likely to be obtained by prospective investors or lenders in relation to a business seeking to exploit this deposit, and likely to influence such persons favourably. The existence of the publication was, therefore, a relevant fact making the document admissible for that purpose.

85 The report stated that peat was a mineral and not a stone for the purposes of the Victorian mining legislation. The existence of such a document containing that statement was said to be relevant, first, to whether the Victorian government had a practice of so classifying peat in 1988 (when certain of the defendants alleged they were told on enquiry that the practice was otherwise) and, secondly, relevant to whether that was the practice subsequently (addressing the defendants’ argument that peat was not legally a mineral under the Victorian mining legislation). It is unnecessary to decide that ground of relevance for the present purpose because the document is admissible as a publication for the reason stated above. Relevance for the practice point can be argued later.

86 Sections 60 and 77 then operate to make representations in the document admissible for any other purpose unless the use of that evidence is limited pursuant to s136.

87 The passages in the document specified by the plaintiffs as containing relevant representations of fact and opinion are as follows:

18.2 Properties, used and specifications
Peat has a specific gravity of 0.1-1.6 (depending on water content), has a high porosity, is fibrous and elastic, resistant to decomposition, has a pH of 2.8-4.0, and a lack of nutrients (Harben, 1992). These properties make it very suitable for its primary uses which are in the agricultural field, i.e. in facilitating aeration and water retention of soils; as a potting mix ingredient; as a fertiliser carrier; in mushroom beds and earthworm culture; and in seed inoculating and flower packing.
The high porosity, good absorption and ion exchange capacity of peat, make it a natural filtering and cleaning material, e.g. in industrial and domestic waste treatment, cleaning up oil spills and filtering sewage.
…
18.6 Victorian resource potential
To date, there have been no regional investigations of peat resource potential in Victoria.
…
Western District Plains
Numerous peat deposits occur in poorly drained parts of the Newer Volcanic Plains of south-western Victora. Peat has accumulated to significant depths in some of the swamps which formed when stream courses were filled or blocked by the younger valley-flow and stony rise basalts. Other peaty swamps have formed in the roughly circular depressions representing maar craters, most of which are found between Port Fairy and Colac.
Examples of the former type (all occurring within the Colac 1:250,000 Geological map sheet area) are:

· Mount Emu Creek flats, just west of Panmure and east of Terang (north and south of the Princes Highway);

· Hopkins River, north-west of Ellerslie;

· Curdie River, south-east of Bostock Creek;

· Barwon River flats, around Birregurra;

· Swan Marsh, near Irrewillipe; and

· several swamp areas to the north-west of Lake Corangamite and surrounding the smaller lakes between Cressy and Colac.

At Swan Marsh , a black sedge peat deposit occupies an area of about 650 ha and extends to depths of up to 10 m with practically no overburden. Part of this deposit is covered by Mining Licence 4667 which has recently been granted to allow for a major peat extraction project. Following removal of the peat by excavator and dredge, it will be dried and milled to produce a material suitable for use in soil conditioning, horticulture and as a fertiliser ingredient.
…
18.7 Outlook
In view of the many peat occurrences in the State, particularly of the sedge type, and favourable markets, at least in horticultural and agricultural industries, there would appear to be good prospects for new peat producing operations in Victoria.

88 I rule that the representations in these passages are not to be used as evidence of the truth of the facts stated or as evidence of opinion to prove any fact the subject of the opinion.

89 My reasons are as follows:

(i) The authors of the document are not to be called. The defendants would therefore not have the opportunity of testing by cross-examination the truth of the facts and the efficacy of the opinions stated in the document. There is no evidence that the authors are unavailable and there is no explanation for not calling them.

(ii) Much of the information stated is unlikely to be personally known to the authors and is unsourced.

(iii) The authors of the document are not shown to be qualified by training or experience to provide the stated opinions as experts.

(iv) The assumptions on which opinions are based and the process of reasoning leading to the opinions are not disclosed.

(v) This is not the kind of evidence likely to have been in the contemplation of the legislature when enacting ss 60 and 77. Unsourced factual evidence and unsupported opinion evidence, would be admitted against the defendants in consequence of the fortuitous circumstance that the report is relevant and admissible for other reasons.

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Last Modified: 10/13/2003