Sheahan & Lock v Chan - [2020] SADC 59

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SHEAHAN & LOCK v CHAN & ORS
[2020] SADC 59
Decision of His Honour Judge Burnett
20 May 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - CASE MANAGEMENT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COURT SUPERVISION - ADJOURNMENT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - TRIAL - MODE OF TRIAL
The plaintiffs, as liquidators of Custom Sportswear Pty Ltd (in liquidation), have brought a claim against the defendant, as a former director of that company, for alleged failure to prevent insolvent trading contrary to s 588G(2) of the Corporations Act 2001. The plaintiffs seek the sum of $198,183.13. The defendant denies that the company was insolvent and has also raised a number of the statutory defences provided for in s 588H of the Corporations Act. The defendant has also joined two former directors of the company as third parties.
The proceedings were issued in September 2016. In April 2019 the matter was listed for a five-day trial commencing on 19 August 2019. On 1 August 2019 the defendant made an application for vacation of the trial date on the basis of his mental health. The Court made an order on 2 August 2019 vacating the trial, but indicated that it would expect greater detail if a further adjournment of the trial was sought.
In October 2019 the matter was re-listed for trial commencing on 6 July 2020 for five days.
By interlocutory application dated 1 May 2020, the defendant has made a further application for the adjournment of the trial. The basis of this application is two-fold: first, the defendant submits it is not practical as a result of the defendant’s isolation due to COVID-19 (the defendant is 76 years of age) and his current medical condition for him to give instructions to his solicitor and counsel in preparation for trial; secondly, the defendant further says that it would be oppressive and unfair to the defendant in light of the prevailing circumstances relating to his health and isolation to conduct the trial. The defendant disputes that a trial where he gives evidence by an audio-visual link would be fair to the defendant in circumstances where credibility of the defendant is a relevant issue.
Held the application for an adjournment of the trial is refused.
The wider considerations of the efficient use of the Court’s resources and the public confidence in the administration of justice are factors favouring the refusal of the defendant’s application for an adjournment of the trial. The plaintiffs will suffer prejudice by the further adjournment of these proceedings that cannot be compensated by a mere order as to costs.
The defendant has six weeks to prepare for a trial and has the ability to provide instructions, observing social distancing principles.
A trial where the defendant gave evidence by audio-visual means would not be unfair to the defendant. The issues of credibility that arise can be fairly determined, notwithstanding that the defendant may give evidence by audio-visual link.
The Courts have a responsibility to continue to hold trials during the COVID-19 period where it is safe to do so and the trial can be held in a way that is consistent with the requirements imposed by the State and Federal governments’ response to COVID-19. There may need to be some modification of normal procedures to ensure that this trial conforms to these requirements and to accommodate the defendant. These accommodations can be easily made.
Corporations Act 2001 (Cth) s 588G(2) s 588H s 1318; District Court Civil Rules 2006 (SA) r 3, 116, 117; Evidence Act 1929 (SA) s 13A(2)(a), referred to.
Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175; Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59; (2010) 273 LSJS 70; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No. 3) [2009] FCA 1306; (2009) 181 FCR 152; Tetra Pak Marketing Pty Ltd v Musashi Pty Ltd [2000] FCA 1261; Versace v Monte [2001] FCA 1454; Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2002) 119 FCR 303; Doragay Pty Ltd v Aristocrat Leisure Limited [2007] FCA 1502; Stuke v ROST Capital Group Pty Ltd [2012] FCA 1097; Talent v Official Trustee in Bankruptcy & Anor (No 5) [2020] ACTSC 64; Roberts-Smith v Fairfax Media Publications Pty Ltd (No 4) [2020] FCA 614; Australian Securities and Investments Commission v GetSwift Limited [2020] FCA 504; JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [2020] WASCA 38, considered.

SHEAHAN & LOCK v CHAN & ORS
[2020] SADC 59
Introduction

By Interlocutory Application dated 1 May 2020, the defendant has sought the vacation of the trial of this matter listed for five days commencing on 6 July 2020. The defendant has sought the vacation of the trial date because of his current medical condition, particularly in the context of the COVID-19 pandemic. The defendant submits that given these matters it is not practical for the defendant’s solicitor and counsel to obtain instructions from him leading up to the trial nor would it be possible to conduct the trial in a manner that would not be oppressive and unfair to the defendant.
The defendant submits that his ability to give instructions will depend upon the results of an examination with his urologist to be conducted on 20 May 2020 and a change in the COVID-19 advice for persons in the position of the defendant. The defendant is 76 years of age and in poor health.
The plaintiffs oppose the application to vacate the trial. The first and second third parties, who are both unrepresented and attended the interlocutory hearing by telephone, remained neutral in relation to the application. The third third party, Mr Zhong Won Gun, has not been served and has taken no part in the proceedings.
Nature of the proceedings
The proceedings are brought by the plaintiffs as liquidators of Custom Sportswear Pty Ltd (in liquidation) (Custom Sportswear). The proceedings were commenced in September 2016 and concern events that took place in the period between 2010 to 2012. The plaintiffs claim that the defendant, as a director of Custom Sportswear, failed to prevent insolvent trading by Custom Sportswear contrary to s 588G(2) of the Corporations Act 2001 (Cth) (the Corporations Act). The plaintiffs seek the sum of $198,183.03 from the defendant.
The defendant denies that Custom Sportswear was insolvent. The defendant also relies upon a number of the statutory defences set out in s 588H of the Corporations Act.
The factual basis of the defence of the defendant is set out in his third amended defence. The defendant pleads that Mr Ryan or alternatively Mr Wordley, who were both directors of Custom Sportswear, were responsible for the day to day management of Custom Sportswear. It is alleged that Mr Ryan dealt with the taxation liabilities of Custom Sportswear. Further, Custom Sportswear had employed an internal accountant, Mrs Liz Lounder and an external accountant Mr Phil Lounder, a director of PDK Financial Tax and Accounting Pty Ltd trading as PDK Financing Accountants, to prepare all statutory reports.
The defendant further pleads that he was not made aware of any outstanding liabilities to the Commissioner of Taxation, whether those liabilities were in respect of the primary tax that was payable, the superannuation guarantee or the general interest charge. The defendant also pleads that he received no response to a query he raised about the solvency of Custom Sportswear and further received advice from GMG Legal Services, upon which he relied, that Custom Sportswear was solvent.
Further, in relation to the debt incurred by Custom Sportswear to Hi-Tech Laundry Services, the defendant also pleads that he was not aware of that company being engaged by Custom Sportswear.
In relation to the shortfall owed by Custom Sportwear to GMG Legal Services and Esanda Finance, the defendant further pleads that he did not give his consent to the entry into the arrangements with those companies and, in the case of Esanda, was not aware of the liability of Custom Sportswear to Esanda until the end of 2010.
Given this factual background, the defendant relies upon the statutory defences set out in s 588H of the Corporations Act. Section 588H(2) provides that it is a defence to a claim made pursuant to s 588G(2) if it is proved that, at the time when the debt was incurred, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent even if it incurred that debt and any other debts that it incurred at that time.
The defendant may also rely upon s 588H(3) which provides that it is a defence if it is proved at the time that the debt was incurred that the defendant:
(a) had reasonable grounds to believe, and did believe:
(i) that a competent and reliable person (the other person) was responsible for providing to the first-mentioned person adequate information about whether the company was solvent; and
(ii) that the other person was fulfilling that responsibility; and
(b) expected, on the basis of information provided to the first-mentioned persons by the other person, that the company was solvent at that time and would remain solvent even in incurred the debt and any other debts.
It is unclear whether the defendant is also relying upon s 588H(4) on the basis that for some good reason, he did not take part in the management of Custom Sportswear.
It is likely that the defendant will rely upon s 588H(5) which provides that it is a defence if it is proved that the defendant took all reasonable steps to prevent the company from incurring the debt or making the disposition of its property.
The defendant has also instituted third party claims against the first third party, Mr Ryan and the second third party, Mr Wordley. The basis of the third party claims is that at all relevant times Mr Ryan and Mr Wordley were directors of Custom Sportwear and were responsible for carrying on the business of Custom Sportswear. The defendant pleads that he was reassured by Mr Ryan and Mr Wordley that Custom Sportswear was solvent and was not made aware, by Mr Ryan and Mr Wordley, of the incurring of the debts and was not provided with information about the accounts of Custom Sportswear, despite requests. The defendant also pleads that he was not made aware of solvency issues by either Mr Ryan or Mr Wordley.
The first third party, Mr Ryan, has denied these allegations, but also pleads that Mr Ryan and the defendant entered into a Deed on 25 August 2015 which provided that the defendant would not make any claim in relation to Custom Sportwear against Mr Ryan and therefore the defendant is precluded from making a third party claim. Mr Ryan has raised the further defence that he acted honestly and having regard to the circumstances of the case ought to be relieved of any liability pursuant to s 1318 of the Corporations Act.
The second third party merely denies the claims against him.
History of Proceedings
The proceedings were issued in September 2016. The matter was referred to a listing appointment on 21 March 2019. On 2 April 2019, the matter was listed for a five day trial commencing on 19 August 2019.
On 1 August 2019, the defendant made an application for vacation of the trial date on the basis of his mental health. The defendant relied upon a relatively brief medical report from his general practitioner, Dr Alexander. That report is in similar terms to the report that is now relied upon from Dr Alexander in the application for the further adjournment.
On 2 August 2019, Judge Chivell made an order vacating the trial. Judge Chivell made the following comments when granting the adjournment:
I am inclined to grant the adjournment on the basis of the doctor’s report. Clearly it will need to be gone into in much greater detail the next time around. Clearly the parties will have to consider, particularly the defendant will have to consider, what steps need to be taken to enable him to give evidence. It seems to me, in cases like this, it is not an all or nothing thing, the Court can make various arrangements for a person in Dr Chan’s position to give evidence, including shorter sitting times, the presence of helpers in the courtroom, arrangements which might be needed to provide first aid or any other form of assistance you might need when giving evidence. If he is yet to see the psychiatrist and have his condition properly diagnosed and have a proper medication regime established I think it is appropriate to vacate the trial date on this occasion but I simply make those comments for the assistance of whoever might be assisted by them in case the matter arises again.
On 4 October 2019, Judge Chivell listed the matter for trial commencing on 6 July 2020 for five days.
Application for the vacation of the trial
It is in this context that the defendant’s application for a further vacation of the trial must be considered. The defendant relies upon the twelfth affidavit of Mr Nicholas Baldock affirmed on 1 May 2020 and the medical report from Dr Alexander, the general practitioner of the defendant, dated 17 April 2020.
In his affidavit, Mr Baldock deposes to conversations that he has had with the defendant in which the defendant advised him that he was having great difficulties with the isolation forced upon him by COVID-19 restrictions and that he was having a lot of trouble sleeping and that he was depressed and was worried about his business and health and the upcoming trial was causing him a lot of anxiety and stress. The defendant advised Mr Baldock that he had been back to his general practitioner, Dr Alexander, and had been referred to a couple of specialists in relation to his depression and prostate cancer. The defendant informed Mr Baldock that he was seeing his psychologist Dr Nina Cook on 17 August 2020 and his urologist, Dr Stapleton, on 20 May 2020 (in relation to the prostate cancer). The defendant’s solicitors say that they will not be able to properly prepare for trial and take instructions and proof the defendant for the trial. Mr Baldock goes on to state that that they would be unable to prepare for trial during the COVID-19 restrictions and for some time thereafter, assuming a positive assessment of the defendant’s medical condition is made.
The report of Dr Alexander is brief and relevantly states in relation to the defendant:
1.   He still continues with his depression and it has not improved. Unable to see psychologist unfortunately as she is unavailable til 17 August 2020 at which time he will see her.
His liver cancer is getting worse and he is still being treated by his specialist and recently PSA was raised, leading to concerns for prostate cancer for which he will see a urologist in the next few weeks for possible surgery or chemotherapy. Of course, he continues to worsen with respect to his heart and diabetes and suffers greatly from these.
2.   He still continues with emotional liability, a degree of suicidal ideation still remains, insomnia and low self-esteem. This has not improved. The COVID situation has made him fearful and depressed and of course, due to the fact of his age, he is paranoid about social distancing and in view of this I advise the postponement of legal activities til COVID has settled.
3.   He continues on the antidepressant mirtazapine which does not appear to have helped. He continues to receive psychotherapy from his psychologist. So far there has been little change in his condition so he continues with therapy. As a result of his severe depression his marriage has been effected and this may lead to separation.
4.   Unfortunately, he still remains unfit to withstand the three to five day briefing process with his barrister and the subsequent five-day trial. I plan to re-assess him again in three months’ time to see if he has improved sufficiently for this to take place, but it would be best if things are postponed until the end of the COVID crisis.
The plaintiffs oppose the adjournment. The plaintiffs adduced evidence that there had only been minimal recoveries in the liquidation and that there were no other assets of Custom Sportwear which could be recovered. Creditors in the liquidation totalled $573,131.61.
Legal principles relating to an adjournment of the trial
Applications for an adjournment or vacation of the trial must be considered by reference to the principles set out by the High Court in Aon Risk Services Australia Limited v Australian National University (Aon).[1]
[1] [2009] HCA 27; (2009) 239 CLR 175
In Aon, French CJ held:[2]
[24] …..Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but which transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates or adjourn trials…
[25] Recognition of the public interest in the administration of civil justice procedures in Australia and the United Kingdom pre-dates the Woolf Report and its attendant reforms. In Dawson v Deputy Commissioner of Taxation, King CJ acknowledged the responsibility of judges to ensure ‘so far as possible and subject to overriding considerations of justice’ that the limited resources which the State commits to the administration of justice are not waste by the failure of parties to adhere to trial dates of which they have had proper notice
[30] It might be thought a truism that ‘case management principles’ should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, JL Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502. Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to acceded to applications made without adequate explanation of justification, whether they be for adjournment, for amendments giving rise to adjournment or for vacation of fixed trial dates resulting in the resetting of interlocutory processes.
[2] Ibid at [24], [25] and [30]
The plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) held that:[3]
Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a just resolution must be understood in light of the purposes and objective of the rules. Speed and efficiency in the sense of minimum delay and expense are an essential part of a just resolution of proceedings....but it suggests that limits may be placed on re-pleading when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution.
[3] Ibid at [99]
In Aon, the High Court therefore emphasised that an application that will, if granted, result in the vacation of a trial date, should be determined in a broader context which also considers: first, the efficient use of public resources and the effect on the Court and other litigants if a trial date is vacated; secondly, the public interest in the administration of justice; thirdly, that prejudice to the other party goes beyond matters of costs and cannot not be compensated merely by an order for costs.

The Full Court in Channel Seven Adelaide Pty Ltd v Manock[4] held that following Aon, the relevant principles in deciding whether to permit an amendment that will result in an adjournment of a trial were as follows:
[4] [2010] SASCFC 59 at [46]; (2010) 273 LSJS 70.
(1)Whether there has been undue delay in making the application;
(2) The extent to which there will be wasted public resources in granting the amendment;
(3) Whether there will be inefficiency occasioned by the need to need to revisit interlocutory processes;
(4) Whether a trial date would need to be vacated or a trial adjourned;
(5) Whether there is any satisfactory reason of the delay in applying;
(6) Whether the point to be raised by the amendment would be raised in any event at the trial;
(7) The likelihood of strain and uncertainty being imposed on the litigants;
(8) Whether any further delay would undermine confidence in the administration of civil justice;
(9) Any other prejudice likely to be suffered by the other party;
(10) The additional costs likely to be incurred.
The just resolution of the dispute must be understood in light of the purposes and objectives stated in the Rules. Rule 3 of the District Court Rules 2006 (SA) (DCR) provides that the object of these rules are:
(1) To establish orderly procedures for the just resolution of civil disputes; and
(2) To facilitate and encourage the resolution of civil disputes by agreement between the parties; and
(3) To avoid all unnecessary delay in the resolution of civil disputes; and
(4) To promote efficiency in dispute resolution so far as that object is consistent with the paramount claims of justice; and
(5) To minimise the cost of civil litigation to the litigants and the State.
Determination of the application
I must consider the application and the findings in the context of the principles set out in Aon and the objectives set out in the Rules in relation to the conduct of proceedings
There are obvious wasted public resources if I were to vacate the trial for a second time. The vacation of the trial would affect not only the litigants in these proceedings, but also other litigants in other proceedings whose trials will not be heard as soon as otherwise would be the case.
Further, I consider that the public confidence in the administration of civil justice would be undermined if the defendant was granted an open-ended adjournment where no future trial date was set. Both the plaintiffs and the third parties are entitled to have these proceedings resolved. I am mindful, in this regard, that the proceedings were instituted four years ago and concern events that took place between eight to ten years ago. In these circumstances, I also consider that the plaintiffs will suffer prejudice that cannot be compensated merely by a costs order.
I also consider that public confidence in the administration of civil justice may be undermined if the warnings made by Judge Chivell on the previous occasion when the trial was adjourned are ignored with impunity. In granting the adjournment, Judge Chivell held:
(1) the medical evidence would need to be gone into in greater detail on the next occasion;
(2) the defendant would need to consider what steps needed to be undertaken to enable him to give evidence;
(3) modified arrangements could be made to assist the defendant give evidence; and
(4) the defendant should be given the opportunity to establish a proper medication regime and consult with a psychiatrist.
The defendant has not addressed each of these matters. The defendant has not adduced detailed medical evidence of the type contemplated by Judge Chivell. I would have expected a report from the defendant’s treating psychiatrist to outline the defendant’s condition, its prognosis and the treatment provided to date. Secondly, the defendant has not adduced evidence as to the steps that need to be undertaken to enable him to give evidence. Thirdly, the defendant’s rejection of modified arrangements for the hearing of the matter is based on his rejection of giving evidence by audio-visual link which, I do not consider justified. Fourthly, there is only brief evidence as to the defendant’s medication and his treatment for his mental health issues.
On the other hand, if I were satisfied that the defendant was unable to give evidence because of his medical conditions and those conditions could reasonably be expected to improve in the future, then a just resolution of the proceedings would require there to be an adjournment of the proceedings.
The defendant’s medical conditions can be grouped into three categories.
(1) His physical health. The defendant has liver cancer which is deteriorating and which continues to be treated. There are concerns that he may have prostate cancer for which he will see a urologist on 20 May 2020. He also has heart issues and diabetes;
(2) The defendant has mental health issues and suffers from depression which has caused emotional lability, a degree of suicidal ideation, insomnia and low esteem. In Dr Alexander’s opinion, his mental health issues have not improved;
(3) The mental health issues associated with his depression have been exacerbated by COVID-19.
Based on the evidence of Dr Alexander, it does not appear that the defendant’s physical health is likely to improve in the near future. That said, apart from the possibility of surgery or chemotherapy, the defendant’s physical health alone would not prevent him from giving evidence and a trial being conducted. In his written submissions, the only reliance placed by the defendant on his physical health arises if the urologist prescribes further treatment.
The defendant’s mental health has not improved since the vacation of the last trial in August 2019. It has in fact been exacerbated by the COVID-19 situation. I accept that the defendant because of his age, is in the category of persons at risk because of COVID-19 and that he experiences, quite reasonably, anxiety as a consequence. He is next due to see a psychologist on 17 August 2020, but there is no suggestion that his mental condition is likely to improve within a certain time frame.
In the defendant’s submissions, it is not his mental health condition alone that would justify a vacation of the trial, but the isolation and social distancing requirements that are required as a consequence of COVID-19. I therefore consider that the defendant would not be precluded by his mental or physical health from giving evidence by audio-visual link if this is a viable option.
I accept, as the plaintiffs submit, that the position in relation to COVID-19 is rapidly changing and some of the restrictions that have been imposed have already been lifted. It is difficult to predict exactly the position in relation to restrictions, social distancing requirements and self-isolation when the trial is to be held on 3 July 2020. However, whatever that position may be, I consider that it is reasonable to assume that the defendant, with his current mental condition, would still experience anxiety in relation to his presence in person at trial.
The issue therefore, is whether a just resolution of the proceedings can take place in circumstances where the defendant may not be able to be present in Court and would have to give his evidence by way of audio-visual link. A just resolution of the proceedings would also require the defendant to be able to give instructions to his solicitors and counsel.
If the defendant is able to provide proper instructions to his solicitors, both pre-trial and at trial, and if the trial is able to be held without the defendant’s personal attendance in court, then I consider that there could be a just resolution of proceedings at the forthcoming trial. If the defendant refused to give evidence by audio-visual link then I consider that, the prejudice that would be suffered by the plaintiffs by the second vacation of the proceedings and the diminution in the public confidence in the administration of justice would be of sufficient weight that, in all the circumstances, I would refuse the application for the adjournment of the trial.
Turning to the question of instructions, I am not satisfied that the defendant will be unable to give proper instructions to his counsel and instructing solicitors for the preparation of the trial. The trial is not listed until 3 July some six weeks away. Counsel advised during the course of the hearing that the Tender Book had been prepared and was about one full volume. The issues are defined. The plaintiffs must establish that Custom Sportswear was insolvent at the times that the debts were incurred. The plaintiffs have obtained an export report in support of its contention that the company was insolvent. The defendant has not obtained any expert report disputing the conclusions reached by the plaintiff’s expert.
The defendant also must establish the factual basis of the defences provided for in s 588H of the Corporations Act. The defendant will need to give evidence about the circumstances which will give rise to those defences. This means that the defendant will need to provide detailed instructions in relation to those matters including by reference to documents in the Trial Book. Given the six-week period before trial and the availability of technology, I can see no reason why the defendant is not able to properly prepare for trial. The defendant could also attend the offices of his solicitors, observing social distancing principles. His solicitors and counsel could attend at his home.
The more difficult question is whether, assuming the defendant is unable to attend in person at Court, a just resolution of the proceedings can occur when the defendant is not present in person at Court and does not give his evidence viva voce.
This issue has been addressed by various courts during the COVID-19 pandemic. Courts have expressed differing views in relation to this issue.
Before COVID-19, different views had been expressed as to the hearing evidence by audio-visual link.
In Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No. 3),[5] (Campaign Master) Buchanan J held:[6]
I did not understand it to be contested by the applicant that, generally, oral evidence should be given directly to, and in the presence of, the Court. Nor was it contested that normally a respondent could insist upon the physical presence of a witness for cross-examination. However, the applicant has asked that Mr McDermott, and one other witness, be relieved from this requirement and allowed to attend for cross‑examination by video link from London. The application for departure from the usual practice was based upon the proposition that the inconvenience of insisting upon the usual practice in the present case outweighed the possible prejudice to the respondent (or inconvenience to the Court) in not doing so.
Video link communications are, without doubt, a facility which may permit communication at greatly reduced cost and inconvenience. In the work of a court they are, in my view, certainly to be preferred to exchanges by telephone although, properly supervised, in some cases questions can be administered, and answers given, by audio-link alone. Although video link permits a visual frame of reference my own experience with it, despite all the technological advances, is that it has significant limitations. That is particularly so when cross-examination is required on matters where it may be important to form a view about the reliability of evidence and, perhaps, the credit or overall credibility of a witness.
[5] [2009] FCA 1306; (2009) 181 FCR 152.
[6] Ibid at 62
The decision in Campaign Master reviewed a number of other authorities which were both in favour and against evidence being given by audio-visual means. The case most commonly cited in favour of evidence being given by audio-visual means is Tetra Pak Marketing Pty Ltd v Musashi Pty Ltd[7] (Tetra Pak) where Katz J held:[8]
I find a strong current of authority in favour of permitting the relatively new video link technology to be used, in the absence of some considerable impediment telling against its use in a particular case. I do not find in this case, having regard to the matters put to me by counsel for the respondents, anything sufficiently out of the ordinary to cause me not to permit Dr Roulin’s evidence to be taken by video link.
[7] [2000] FCA 1261
[8] Ibid at [25]
In Versace v Monte,[9] Tamberlin J referred to, with approval the observations of Katz J.
[9] [2001] FCA 1454
Notwithstanding these observations, there was also considerable judicial support for the position that video link evidence was inferior to viva voce evidence. In Australian Competition and Consumer Commission v World Netsafe Pty Ltd[10] (World Netsafe) Spender J held”[11]
Notwithstanding observations in those cases that there is essentially no real difference between evidence by video-link and viva voce evidence, I disagree, and I think it right to recognise that there are deficiencies when evidence is taken by video-link when compared with evidence given viva voce.
[10] (2002) 119 FCR 303
[11] Ibid at [7]
In Doragay Pty Ltd v Aristocrat Leisure Limited[12] Stone J referred to the difficulties relating to the taking of evidence by video link and cross-examination on that evidence. He referred to difficulties in maintaining a line of cross-examination and a difficulty in assessing a witness where evidence is given by video link.
[12] [2007] FCA 1502 at [6]
In 2012, Katzmann J in Stuke v ROST Capital Group Pty Ltd[13] (Stuke) referred to the two schools of thought about evidence being given by video link. Katzmann J made reference to one school which held (as at 2012) that given the advanced state of video link technology and the convenience and savings in cost and time, the court would only decline to make an order for evidence by video link if the opposing party made out a substantial case against its use.[14] The decisions of Katz J in Tetra Pak and Tamberlin J in Versace v Monte were the authorities most frequently cited in support of this view.[15]
[13] [2012] FCA 1097; (2012) 207 FCR 86
[14] Ibid at [28]
[15] Ibid
Katzmann J then made reference to the second school of thought which rejected this approach and said that where there were major issues of credit, it was desirable to have the witnesses in court for examination, unless there were good reasons to the contrary. In support of this position Katzmann J cited the decisions of Australian Medical Imaging Pty Ltd v Marconi Medical Systems Australia Pty Ltd[16] and World Netsafe. In Stuke, Katzmann J referred to the issue of credit and that “demeanour of the witness played some importance”.[17] While recognising that demeanour was probably overrated as a tool for evaluating whether a witness is telling the truth, Katzmann J went on to hold:[18]
… that the primacy of the appellate courts still afford the decisions of trial judges on questions of credit is in part due to “the subtle influence of demeanour”…. subtle changes in demeanour may be apparent in a courtroom and not so apparent if the evidence is given by video link (as the Full Court of the Family Court accepted in K v S (2001) 161 FLR 71 at [24]), although as Austin J observed in Australian Securities and Investments Commission v Rich [2004] NSWSC 467 at [28], they are likely to be picked up by a video camera. And what if there is a delay in giving a response to a critical question? It may be impossible to tell whether the delay is due to evasiveness or uncertainty on the part of the witness or merely to difficulties with the transmission. Giles CJ Comm D adverted to the problem of delay in his judgment in Sunstate.
[16] (2001) 53 NSWLR 1
[17] Ibid at [28]
[18] Ibid at [30]
Katzmann J concluded that the cross-examiner was almost always at a disadvantage, and often at a significant one, cross-examining a witness giving evidence from a remote location where credit is an issue.
Even during this COVID-19 pandemic, courts have taken differing views as to whether or not it is possible to hold a just trial where a party or witness is able to only give evidence by way of video link. Much will depend on the nature of the case. For example, in Talent v Official Trustee in Bankruptcy & Anor (No 5)[19] Elkaman J observed that litigants have a right to appear in court, not only to give evidence, but also to observe the running of the case, including providing instructions. In Roberts-Smith v Fairfax Media Publications Pty Ltd (No 4)[20], Besanko J, in a complex trial listed for some six weeks that an in person trial was necessary for two independent reasons. The first reason was the possible disclosure of national security information; the second reason was the nature of the trial:[21]
…this is a trial where the credibility or reliability of the key witnesses may well be crucial in circumstances where the alleged imputations arising from the matters complained of are, as I have said, very serious indeed. I have no doubt that some of the witnesses could give their evidence by audio-visual link, but I consider from my own knowledge of the issues that the position of both of the parties to the proceedings that the key witnesses should give evidence in person in order that the parties have a proper and fair opportunity to present their respective cases is reasonable.
[19] [2020] ACTSC 64 at [13]
[20] [2020] FCA 614
[21] Ibid at [22]
A different result was reached by Lee J in Australian Securities and Investments Commission v GetSwift Limited (GetSwift).[22] Lee J made the following observations:[23]
The singular circumstances presented by the current health crisis, and the arrangements provided for in the Information Note, reflect the Court’s remedial response as an arm of government in continuing to exercise the judicial power of the Commonwealth in circumstances where life cannot go on as usual. Just because one cannot have a hearing conducted in accordance with traditional practices and procedures, does not mean that the Court’s judicial function cannot be performed effectively where it is necessary to do so. As Voltaire observed, one must ensure the perfect does not become the enemy of the good.
[22] [2020] FCA 504
[23] Ibid at [7]
Lee J referred with approval to the observations made by the Court of Appeal in Western Australia in JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd[24] where the Court referred to as arrangements to give evidence by way of audio-visual link as a “necessary but proportionate alteration to the normal practice and procedure of the court consistent with the due administration of justice”.[25]
[24] [2020] WASCA 38 at [8]
[25] Ibid at [8]
Lee J went on to hold that:
The Court must continue to do its job, but fundamental to the discharge of that role is ensuring that cases are determined justly.
Lee J in GetSwift also made a number of observations regarding the assessment of witnesses when the evidence was given by audio-visual link. Lee J stated:[26]
To the extent that demeanour does play an important role in assessing the evidence of witnesses, then my experience, particularly in the recent trial that I conducted, is that there is no diminution in being able to assess the difficulty witnesses were experiencing in answering questions, or their hesitations and idiosyncratic reactions when being confronted with questions or documents. Indeed, I would go further and say that at least in some respects, it was somewhat easier to observe a witness closely through the use of the technology than from a sometimes partly obscured and (in the Court in which I am currently sitting) distant witness box.
[26] (2020) FCA 504 at [33]
The present case is somewhat unusual in that it is not the cross-examining party, the plaintiffs in these proceedings, that is raising an objection to the giving of evidence by audio-visual link. Rather it is the party which is providing evidence in chief via audio-visual link.
I have had regard to the nature of these proceedings. The plaintiffs’ case is essentially a documentary case. Indeed, the plaintiffs have indicated that apart from the expert evidence they may call in relation to insolvency (which is already provided for by way of an expert report), the plaintiffs do not intend to call any other witnesses. This leads me to the conclusion that the defendant, even though not present in court, would not be disadvantaged by his absence.

Further, the defences provided for in s 588H of the Corporations Act have both an objective and a subjective element. The defendant must prove not only that the expectation or belief was objectively held, but also that he did in fact hold the relevant expectation or belief. That expectation or belief is in contest and is a matter of credit. However, the plaintiffs are not adducing any evidence on these topics, so it is not the case of resolving conflicting evidence relating to the same event as might be the case, for example, in a misleading and deceptive case. In the circumstances of this case, the trial Judge could, in my view, determine, if the defendant gave evidence by audio-visual, whether the defendant held the requisite belief or expectation.
The third party claims are relatively simple and are unlikely to require instructions by the defendant that would be unable to be given if he were not present in court. I am cognisant of the fact that there may be more factual issues required to be determined in the third party claims, including how the affairs of the company were conducted and what information was provided to or withheld from the defendant. However, I consider that these are the sorts of issues that can be determined by the trial Judge, notwithstanding that the defendant may give his evidence by audio-visual link and not be present in court.
As the plaintiffs submitted, the trial judge is able to make orders pursuant to DCR 116 and 117 to accommodate the giving of evidence by the defendant, for example having short sitting hours or extended breaks.
I adopt the remarks of Lee J in GetSwift namely that the courts have a responsibility to exercise the judicial power to continue hearings and trials during this period of the COVID-19 pandemic, wherever possible. The modification of procedures which will allow this to occur, seem in the words of Lee J in GetSwift, to be:[27]
… a necessary but proportionate alteration to the normal practice and procedure of the court consistent with the due administration of justice.
[27] [2020] FCA 504 at [8]
The Courts in South Australia have acknowledged their respnsibility to continue to administer justice during the time of COVID-19, when to do so is consistent with efforts to contain the pandemic and with the health and safety of those participating in the trial. The Courts have also acknowledged that there may need to be some modification of normal procedures to ensure that they may occur.
I also consider that the defendant will not be materially prejudiced by having a trial conducted where evidence is heard by audio-visual link. In 2020, it is common for even critical evidence relevant to credit to be given by audio-visual means in criminal matters. I refer to the evidence of vulnerable witnesses in criminal proceedings which may be given in various ways that do not involve viva voce evidence pursuant to s 13A(2)(a) of the Evidence Act 1929 (SA). In those cases, the legislature has accepted that a fair trial may he held, notwithstanding the fact that the evidence is given by audio-visual measures.
I also adopt the comments by Lee J in GetSwift that a witness giving evidence by audio-visual link is not disadvantaged by his or her remote location and that the judge is equally able to observe his demeanour when responding to questions. The judge is equally able in my view, to assess the credit of a witness giving evidence remotely by audio-visual link.
Conclusion
For these reasons, I dismiss the defendant’s application for a vacation of the trial.
On the evidence presented on this application, I consider that the defendant will be able to prepare for the trial and able to give evidence by audio-visual measures. It may be necessary for the defendant to attend at his solicitor’s office when the evidence is to be given or for a solicitor to attend at his home.
Further, the Court has power to modify its procedures if necessary, for example by shorter sitting hours or extended breaks so as ensure that the defendant is able to give evidence. In these circumstances, I consider that the trial can be conducted in a fair manner and in a way that is not oppressive to the defendant.
In the event that it becomes necessary for the defendant to either obtain surgery or undertake chemotherapy prior to the trial, the defendant may make an application for a further adjournment as I would consider that the circumstances relevant to the exercise of my discretion would have materially changed.