Spalla v St George Motor Finance Ltd (ACN 007 656 555)

[2004] FCA 470

FEDERAL COURT OF AUSTRALIA

Spalla v St George Motor Finance Ltd (ACN 007 656 555) [2004] FCA 470

ANTHONY PATRICK SPALLA, ANDREW DAVID BENTLEY STILL, IRLMOND PTY LTD (ACN 066 314 870) (RECEIVERS AND MANAGERS APPOINTED;  IN LIQUIDATION)  -v-  ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555), ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886), ANDREW WILLIAM BECK, ANDREW STEWART HOME, DELOITTE TOUCHE TOHMATSU, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AND SIMON ALEXANDER WALLACE SMITH

V 3203 of 2002

RYAN J

16 APRIL 2004
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 3203 of 2002

BETWEEN:

ANTHONY PATRICK SPALLA
First Applicant

ANDREW DAVID BENTLEY STILL
Second Applicant

IRLMOND PTY LTD (ACN 066 314 870) (Receivers and Managers appointed;  in liquidation)
Third Applicant

AND:

ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555)
First Respondent

ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886)
Second Respondent

ANDREW WILLIAM BECK
Third Respondent

ANDREW STEWART HOME
Fourth Respondent

DELOITTE TOUCHE TOHMATSU
Fifth Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Sixth Respondent

SIMON ALEXANDER WALLACE SMITH
Seventh Respondent

JUDGE:

RYAN J

DATE:

16 APRIL 2004

PLACE:

MELBOURNE

REASONS FOR RULING (No 1)

1. In this matter the first and second respondents (“St George”), have moved on a notice dated 5 April 2004 for orders, amongst others;

   ‘(2)     that the proceeding be stayed as an abuse of process; and

   (3)further or alternatively, insofar as the amended statement of claim of the applicants filed and dated 9 December 2003 or the replies filed by the applicants refers to documents obtained by the first and second applicants or their legal advisers in the course of the criminal proceedings and, through them, the liquidator of the third applicant, it be stayed as an abuse of process.’

2. In support of that motion, St George seek to rely on an affidavit sworn 2 April 2004 by their solicitor, Peter John Sinn.  Objections have been taken by Mr Hayes QC, who appears with Mr Wotherspoon of Counsel for the applicants, to the admissibility of various paragraphs of Mr Sinn’s affidavit.  I ruled in the course of yesterday’s hearing on certain of those objections and indicated that I would exclude or disregard, for the purposes of St George’s motion, certain parts or the whole of one or more of paragraphs 5, 11, 12, 20, 25, 31, 33, 36, 37 and 40 of Mr Sinn's affidavit.

3. However, other parts of that affidavit were objected to on the ground that they contain hearsay assertions. Mr Hayes accepted that, on a strict analysis, St George's motion seeks relief which is interlocutory in character and so attracts the application of s 75 of the Evidence Act 1995 (Cth), which provides that, in an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source. However, Mr Hayes submitted, and reiterated this morning, that the consequences to the applicants of the present proceeding being stayed as an abuse of process would be so serious that the Court, in the exercise of its discretion, should require strict proof of the matters to which the challenged paragraphs in Mr Sinn’s affidavit have been directed.

4. Assuming, without deciding, that I have such a discretion, I have examined each of the contested paragraphs and concluded as follows:

   (a)       Paragraph 9: 

5. The second sentence of this paragraph is directed to the compilation of a list of documents by the Australian Government Solicitor and does not appear contentious in the context of the motion for a stay.  The passage will be admitted.

   (b)       Paragraph 18 

6. This paragraph deposes to a conversation between Ms Katherine Horne, a senior associate in the firm of which Mr Sinn is a partner, and Mr Honey of the Australian Securities and Investments Commission (“ASIC”).  The hearsay assertion is supported by exhibiting to Mr Sinn’s affidavit a contemporaneous file note said to have been made by Ms Horne.  In the circumstances, I propose to admit paragraph 18, but the weight to be attached to it will depend on what emerges in cross-examination of Mr Sinn, and perhaps of Mr Honey, and the extent to which it is consistent or inconsistent with other direct evidence.

   (c)       Paragraph 21

7. In this paragraph Mr Sinn deposes to conversations on 2 September 2002 between Mr Michael Syme of Corrs Chambers Westgarth (“Corrs”), who were then acting for St George, and the fifth respondent in the present proceeding (“Deloittes”), and Counsel acting for the present first and second applicants in criminal proceedings in the County Court of Victoria.  Like the hearsay version of the conversation recited in paragraph 18 of Mr Sinn's affidavit, the account of the conversations in paragraph 21 is supported by exhibiting a contemporaneous file note said to have been prepared by Mr Syme.  Moreover, one of the conversations was with Mr Hayes QC, who appeared as Counsel in the criminal trial and is now Senior Counsel for the applicants.  In the circumstances, I shall admit paragraph 21.

   (d)       Paragraph 22

8. This paragraph deposes to a contemporaneous conversation and email communication between Mr Sinn and Michael Syme about the matter deposed to in paragraph 21 discussed in [7] above.  No record of the email is exhibited to Mr Sinn’s affidavit.  Paragraph 22 appears to be directed solely to enhancing the credibility of what has been attributed by hearsay to Mr Syme in paragraph 21.  I therefore consider that paragraph 22 should be excluded. 

   (e)       Paragraph 37

9. This paragraph appears to be confined to a reply to an allegation in an affidavit sworn 11 March 2004, by Ms Arslan on behalf of the applicants.  It is not relevant, as I perceive it, to the motion for a stay of proceedings and will accordingly be excluded. 

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Ruling herein of the Honourable Justice Ryan.

Associate:

Dated:             22 April 2004

Counsel for the Applicants:	Mr P Hayes QC with Mr R S Wotherspoon
Solicitor for the Applicants:	Home Wilkinson Lowry
Counsel for the First and Second Respondents:	Mr G P Harris
Solicitor for the First and Second Respondents:	Middletons
Counsel for the Third, Fourth, Fifth and Seventh Respondents:	Mr J D Elliott
Solicitor for the Third, Fourth, Fifth and Seventh Respondents:	Minter Ellison
Counsel for the Sixth Respondent:	Ms S Pryde
Solicitor for the Sixth Respondent:	Australian Government Solicitor
Counsel for the Cross Respondent:	Mr K Hargrave QC with Mr K Lyons
Solicitor for the Cross Respondent	Hunt & Hunt
Date of Hearing:	5, 15 and 16 April 2004
Date of Ruling:	16 April 2004