Van Der Lee v New South Wales

[2002] NSWCA 286

CITATION:	Van Der Lee & Ors. v. State of New South Wales & Ors. [2002] NSWCA 286
FILE NUMBER(S):	CA 40351/02 - 40358/02
HEARING DATE(S):	26 July 2002
JUDGMENT DATE:	30 August 2002
PARTIES :	Gysbertus Wilhelmus van der Lee, Michael McConnell, Peter Wright, Andrew Griffiths and John Karl Hagley - claimants State of New South Wales; The Minister Administering the National Parks & Wildlife Act 1974; Roads & Traffic Authority of New South Wales - opponents
JUDGMENT OF:	Mason P at 1; Hodgson JA at 26; Santow JA at 68

LOWER COURT JURISDICTION :	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S) :	SC20349/00; 20362/01; 20355/00; 20126/00; 20007/01; 20650/00; 20704/00
LOWER COURT JUDICIAL OFFICER :	Adams J

COUNSEL:	Mr. R.J. Ellicott QC with Mr. D. Stack for claimants Mr. B. Walker SC with Mr. S.A. Gregory and Mr. M. Meek for opponents
SOLICITORS:	Deacons, Sydney for claimants Government Insurance Office of NSW for opponents
CATCHWORDS:	EVIDENCE - Privilege - Without prejudice communications attempting to negotiate a settlement of a dispute - Where such communications are alleged to evidence abuse of process - Whether admissible - PROCEDURE - Abuse of process - Proceedings against employees of deregistered company - Alleged purpose of obtaining money from holding company - Reasonable grounds for bringing proceedings against employees and against holding company - Whether proceedings against employees an abuse of process.
LEGISLATION CITED:	Evidence Act 1995, ss.11, 125, 139.
CASES CITED:	Adams v Cape Industries plc [1991] 1 AllER 929 Briggs v. James Hardie & Co. Pty. Ltd. (1989) NSWLR 549 Citicorp Aust. Ltd. v. Cirillo [2000] SASC 219 In Re Daintrey [1893] 2 QB 116 Dataquest (Australia) Pty. Ltd. v. Dataquest Inc., Tamberlin J, FCA 8/8/96 Dowling v. Colonial Mutual Life Assurance Society Ltd. (1915) 20 CLR 509 Egan v. Willis (1996) 40 NSWLR 650 Field v. Commissioner of Railways (1957) 99 CLR 285 Flower & Hart v. White Industries (Qld) Pty. Ltd. (1999) 87 FCR 134 Hocking v. Western Australian Bank (1909) 9 CLR 738 Idoport Pty. Ltd. v. National Australia Bank Ltd. [2001] NSWSC 222 James Hardie & Co. Pty. Ltd. v. Hall (1998) 43 NSWLR 554 Kang v. Kwan [2001] NSWSC 698 Melbourne Corporation v. Barry (1922) 31 CLR 174 Moran v. Moran [2000] NSWSC 151 Pitts v. Adney (1961) 78 WN(NSW) 886 Potter v. Minahan (1908) 7 CLR 277 Sargood Bros v. Commonwealth (1910) 11 CLR 258 Solomon's Case [1897] AC 220 Southern Equities Corporation Ltd. (In Liq) v. Arthur Anderson & Co. (1997) 70 SASR 166 Spautz v. Gibbs (1990) 21 NSWLR 230 Williams v. Spautz (1992) 174 CLR 509
DECISION:	Leave to appeal refused with costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA40351/02-40358/02

MASON P
HODGSON JA
SANTOW JA

Friday 30 August 2002

VAN DER LEE & ORS.V. STATE OF NEW SOUTH WALES & ORS.

HEADNOTE

Facts
The opponents (the State interests) were defendants in eight proceedings relating to the landslide at Thredbo in 1997. They cross-claimed against Lend Lease Corporation Limited, Lend Lease Residential Pty Limited and the claimants in the present applications seeking damages, contribution and/or indemnity. The claimants were individuals who were former officers and employees of a company, Kosciusko Thredbo Pty Ltd which ultimately owned by Lend Lease Corporation but was deregistered in 1993. The claimants filed notices of motion seeking orders that the cross claims be stayed or dismissed as an abuse of process.

At the hearing of the notices of motion, evidence of a without prejudice discussion between Geoffrey McClellan a solicitor acting for Lend Lease and Peter Garling SC, acting for the State interests was tendered on behalf of the claimants. It was submitted that it showed that the predominant purpose of the proceedings against the claimants was not to recover damages, contribution or indemnity, but to compel Lend Lease Corporation to make a contribution to the settlement of the claims.

Adams J held that s.131 of the Evidence Act precluded evidence of the conversation and that it did not come within any of the exceptions in s.131(2). He also held that s.11 of the Act did not change this position. He was also not satisfied that the proceedings amounted to an abuse of process.

Held:
Per Hodgson JA, Mason P and Santow JA agreeing
1. Section 11(2) of the Evidence Act allows the admission of evidence of without prejudice negotiations which could be evidence of an abuse of process. The court may receive the evidence on the voir dire and if an abuse of process is established then it may rule the evidence admissible and make the appropriate orders.

2. The State interests had reasonably arguable grounds on which to sue the claimants and did so for legitimate tactical reasons. Even if the predominant purpose had been to pressure Lend Lease Corporation into doing something which it was under no legal obligation to do, this would not necessarily have made the proceedings an abuse of process.

Per Hodgson JA, Santow JA agreeing
3. The onus is on the claimants to show that the proceedings are for the purpose of obtaining a collateral advantage or a benefit not reasonably related to an order that could be obtained in the proceedings.

Per Mason P
4. The claimants must show the State interests’ purpose in pursuing the cross claim to be only so that another result will flow, ie indemnification by a party not reasonably obliged to indemnity.
Williams v Spautz (1992) 174 CLR 509 considered

Per Mason P and Santow JA, Hodgson JA contra
5. In s.131(2) of the Evidence Act, ‘a power’ includes a power to bring proceedings.
Idoport v National Australia Bank [2001] NSWSC 222 applied, Kang v Kwan [2001] NSWSC 698 considered.

Order
1. Leave to appeal refused with costs

************

CA 40351/02 to 40358/02
CLD 20349/00, 20362/01, 20355/00, 20126/01, 20007/01, 20650/00, 20704/00

MASON P
HODGSON JA
SANTOW JA

Friday 30 August 2002

VAN DER LEE & ORS. V. STATE OF NEW SOUTH WALES & ORS

Judgment

1 MASON P: I have had the benefit of reading in draft the judgments of Hodgson JA and Santow JA. The facts are set out by Hodgson JA.

2 I agree with Hodgson JA that the evidence, if admissible, does not establish an abuse of process. In particular, I agree with his conclusion that it is not incumbent upon a person bringing proceedings first to investigate and be satisfied as to the assets, insurance or other indemnity arrangements of would-be defendants; nor is it incumbent upon that person to discontinue in the face of an assertion of inability to meet a substantial part of the verdict out of personal assets. It seems to me that this is the effect of the claimants’ argument.

3 I further agree that the claimants’ case also fails because there is a viable claim (the contrary not having been suggested) against Lend Lease Corporation Ltd (LLC) alleging vicarious liability for the acts of the claimants. Joinder of the claimants in that context is not an abuse of process.

4 These conclusions are based upon not being satisfied to the requisite “heavy” standard that the most exceptional circumstances calling forth the power to grant a permanent stay have been met (see Williams v Spautz (1992) 174 CLR 509 at 529).

5 If, contrary to these conclusions, it were the case that the cross-claim was brought with the predominant intent or purpose of putting pressure on LLC to indemnify the former employees of its former subsidiary, would that be an improper purpose? (Mr Ellicott QC for the claimants used the expression “shaming”, whereas Mr Walker SC preferred to use “appealing to LLC’s decency”. They are two sides of the one coin.)

6 The answer is not easy, but I think that there would be no abuse of process.

7 Williams establishes that proceedings may be permanently stayed as an abuse of process if it is shown that they are brought for a predominantly improper purpose, even if there is a prima facie case and the trial would be fair. Dr Spautz laid charges of criminal defamation and conspiracy against persons in authority at the University of Newcastle for what was held at first instance (by Smart J) to be the predominant purpose of exerting pressure upon the University to reinstate him and/or to agree to a favourable settlement of his wrongful dismissal case (see at 515-6).

8 Although the impropriety of such purpose was not in issue in the High Court, there is helpful discussion of the general topic in the judgments. The majority (Mason CJ, Dawson, Toohey and McHugh JJ) said (at 526-7):

The boundaries of abuse of process

The observations of the Privy Council in King v Henderson [[1898] AC at p731] and those of Isaacs J in Dowling [(1915) 20 CLR at pp521-522] to which we referred earlier, represent an attempt to achieve a formulation which keeps the concept of abuse of process within reasonable bounds. To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.

Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent’s conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor’s favour.

It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed [ In re Majory [1955] Ch 600 at pp 623-624] or some collateral advantage beyond what the law offers [ Goldsmith v Sperrings Ltd [1977] 1 WLR at pp498-499; [1977] 2 All ER at pp581-582; see also Varawa (1911) 13 CLR at p91]. So, in Dowling [(1915) 20 CLR at p524], Isaacs J pointed out that “if, for instance, it had been shown that the Society had simply threatened Dowling that unless he did what they had no right to demand from him, namely, give up certain names, they would proceed to sequestration, and they had proceeded accordingly, there would have been in law an abuse of the process”. However, because the Society wished to use the process for the very purpose for which it was designed, there was no abuse of process.

9 This passage contemplates that proceedings may be “designed” to produce results (“advantages” from the plaintiff’s viewpoint) beyond the simple attainment of the relief sought in the writ or implicit in the criminal charge, without necessarily involving an improper purpose.

10 The prosecuted alderman is an example of this phenomenon. Another example is given elsewhere in the principal judgment: their Honours held (at 516-7, 529-30) that vindication of reputation may be a proper purpose of a prosecution for criminal defamation even though the conviction and punishment of the defendant is the only expressly avowed end.

11 Similarly, the action for trespass has often been used as the legitimate vehicle for determining fundamental constitutional principles (cf Egan v Willis (1996) 40 NSWLR 650 at 653). Such proceedings would not be an abuse of process merely because the plaintiff would not have brought them if only concerned to obtain the nominal monetary or purely declaratory relief claimed in the writ.

12 In Williams, Brennan J held (at 535) that:

There is no impropriety of purpose (whatever may be said of motive) when a plaintiff commences or maintains a proceeding desiring to obtain a result within the scope of the remedy, even though the plaintiff has an ulterior purpose – or motive – which will be fulfilled in consequence of obtaining the legal remedy which the proceeding is intended to produce.

13 After reviewing several cases, his Honour concluded (at 537, my emphasis):

For these reasons, I would hold that an abuse of process occurs when the only substantial intention of a plaintiff is to obtain an advantage or other benefit, to impose a burden or to create a situation that is not reasonably related to a verdict that might be returned or an order that might be made in the proceeding.

14 In the Court of Appeal, in Spautz v Gibbs (1990) 21 NSWLR 230, Mahoney JA (dissenting) described Dr Spautz’s improper motive in the following terms (at 233, my emphasis):

In the present proceedings brought by Dr Spautz, the position is that if they are successful, they will produce only orders that the relevant person be fined or imprisoned. Dr Spautz’ purpose or intention was not to produce that, as such. It was to produce that result (or to create the possibility of it being produced) so that, as he would hope, the person sued would be led to influence the University to give him what he believes he should have. Therefore his object is not to obtain the relief which the law gives for the breaches or causes of action which he claims to have. It is to obtain that relief only so that another result will flow from it or, as I think the position is, from the threat of it.

15 These passages offer possibly different formulations of the issue presently to be determined. Is the State’s purpose in prosecuting the cross claim shown to the requisite standard to be:

• the use of proceedings as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers?
• not reasonably related to the verdict that might be obtained against the claimants?
• only so that another result will flow, ie indemnification by a party not legally obliged to indemnity?

16 It is for the claimants to establish an abuse of process against themselves. Mere pressure on a third party to act in a way that is lawful cannot be enough, even if (ex hypothesi) the pressure is intended.

17 Let it be assumed that the State is pursuing the claimants with the intention of creating a situation where a crippling judgment against the claimants is the intended spur to induce LLC to give up a position which it would almost certainly be entitled to adopt in light of the law post-Salomon’s Case [1897] AC 22 (see generally Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549; Adams v Cape Industries plc [1991] 1 All ER 929 at 1019; James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554 at 583-4). There is no suggestion that LLC was on notice of circumstances likely to generate the claims in the proceedings when its subsidiary was placed into voluntary liquidation.

18 There are still points of distinction between the present case and Williams. In Williams, the purpose was to obtain some advantage for which the criminal proceedings against the individuals were not designed, namely favourable intervention by the University. Absent that purpose, the proceedings would not have been brought (hence the finding of predominant improper purpose). In the present case (ex hypothesi), the purpose is to obtain a monetary award against the claimants and then to stare down LLC, the ultimate holding company that profited by their labours in its corporate enterprise, to see if it is prepared to risk the general opprobrium or industrial backlash that might ensue from leaving its former subsidiary’s employees in the lurch. But, unlike Williams, the pressure comes after and in consequence of the award which the law permits, ie the verdict against the claimants personally. In that sense, the State is using the legal process available to it, in the sense discussed by Isaacs J in the passage in Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 521-22 that was cited with approval in the judgments of Williams. In Dowling, the creditor petitioned for sequestration in order to ascertain on an examination of the debtor after sequestration the identity of persons who had instigated the debtor to publish defamatory matter of the creditor. This was held not to involve an abuse of process.

19 The word “only” that I have emphasised in the passages quoted from Brennan J and Mahoney JA makes a similar point.

20 It seems to me that the present case, thus analysed, is analogous to the example of the prosecuted alderman given by the majority in Williams. In that example the ultimate purpose of the prosecutor was to bring about his or her political opponent’s vacating of office, but the immediate purpose (and means) was to secure the conviction. It was sufficient that the latter purpose was within the scope of the legal process: no abuse of process was involved.

21 The alderman’s disqualification from office was the automatic consequence of conviction, whereas the situation in Dowling involved a remedy available at the option of the creditor. But in either case there was a legal entitlement to the step that followed the conviction/sequestration order. By contrast, the consequence sought putatively by the State is at most a matter of moral obligation. Does this matter? I think not. Both categories fall within the scope of the following principle, stated by Brennan J in Williams (at 534):

These cases show that a plaintiff’s intention to achieve a result must be distinguished from his motive for commencing or maintaining a proceeding, though the distinction may be elusive. In Bayne v Baillieu [(1908) 6 CLR 382 at p403], O’Connor J cited with approval a statement by Holroyd J in a Victorian case [ In re Morrissey (1899) 24 VLR 776 at p778]:
I think that if the object of an act is legal, and there is no wrongful intention in it, but the intention is to do something also legal, founded upon that act – it is perfectly immaterial what the ulterior motive of the party may be – what it may be that prompts him to do the legal act.

22 Here the State intends to do something legal “founded upon” the act of securing judgment against the claimants.

23 In reaching the conclusion that there is no abuse of process I recognise the importance of freedom of access to the courts and I do not discern that refusal of the stay would lead to an erosion of public confidence in the courts (see Williams at 519-20). Salomon may indicate LLC’s legal entitlement to benefit from the endeavours of its subsidiary’s employees without standing behind them in their time of need, but it goes no further than that. There is nothing unlawful in anyone asking LLC to indemnify the claimants if and when judgment is obtained against them.

24 I agree with Hodgson JA on the Evidence Act issues, subject to the following. As to the meaning of “a power” in the phrase “in a furtherance of a deliberate abuse of a power” in ss125(1)(b) and 131(2)(k) of the Evidence Act 1995, I prefer the view of Santow JA. Here the relevant power is not the pure creature of the common law, because the proceeding in question is a cross-claim which, as a procedural right, is sourced in s78 of the Supreme Court Act 1970. To my mind this is a specific enough power to fall within the letter and spirit of the paragraphs in question. No basis for reading down is established.

25 I agree with the orders proposed by Hodgson JA.

26 HODGSON JA: These applications for leave to appeal arise out of eight proceedings in which various plaintiffs sue for damages of many millions of dollars in respect of losses caused by a landslide at Thredbo on 30 July 1997. In each of these cases, the State of New South Wales and the Roads & Traffic Authority of New South Wales are defendants, and in some of them The Minister Administering the National Parks & Wildlife Act 1974 is also a defendant. In each of these cases, these defendants (which I will call the State interests) have put on a cross-claim against Lend Lease Corporation Limited (LLC), Lend Lease Residential Pty. Limited (LLR) and five individuals, seeking damages and/or indemnity and/or contribution. The five individuals were former officers and employees of a company which then had the name Kosciusko Thredbo Pty. Limited and which was de-registered in about 1993 (KT1). KT1 was ultimately owned by LLC.

27 In all proceedings, the five individual defendants (the claimants before this Court) applied by Notice of Motion for orders that the cross-claims against them by the State interests be stayed or dismissed. On 5 April 2002, Adams J dismissed those Notices of Motion with costs. The claimants apply for leave to appeal against that decision.

HISTORY

28 In 1961, LLC purchased all the shares of KT1. LLC remained its immediate holding company until 1981, and then was its ultimate holding company until its demise.

29 In 1962, KT1 became the lessee under a 45 year lease of the site of Thredbo Village.

30 In about 1984, a water main was installed by KT1 along the Alpine Way at Thredbo. The State interests allege that the negligence of the claimants in relation to the installation and maintenance of this water main caused or contributed to the landslide.

31 In 1987, KT1 assigned the lease to the company which now has the name Kosciusko Thredbo Pty. Limited (KT2).

32 On 1 March 1993, the members of KT1 passed a resolution that it be voluntarily wound up. KT1 was de-registered on 9 September 1993.

33 As mentioned earlier, the landslide at Thredbo occurred on 30 July 1997.

34 The eight sets of proceedings were commenced between about February 2000 and about May 2001.

35 On 7 March 2001, there was a conference between a solicitor Geoffrey McClellan, acting for LLC and LLR, and Peter Garling SC, acting for the State interests. It is common ground that this conference was a without prejudice discussion, being an attempt to negotiate the settlement of a dispute. Evidence of that conversation was objected to before Adams J, but was received on the voir dire. I will refer to the content of that evidence later.

36 On 31 August 2001, the proceedings were fixed for hearing before Grove J, commencing on 15 April 2002. The hearing to commence on that date was subsequently changed to a hearing of certain separate questions.

37 In about February 2001, the State interests filed the cross-claims against the claimants, LLC and LLR. Those cross-claims each contained a paragraph to the following effect:

114. In the premises:
(a) As and from the period of LLC's purchase of the shareholding of KT1 up to the assignment of the Head Lease from KT1 to KT2, LLC so substantially conducted or alternatively substantially procured and directed the management of KT1, as to assume legal responsibility or otherwise be liable for the obligations and negligent acts and omissions of KT1 and its servants and agents Van der Lee, McConnell, Wright and Griffith.
(b) Further, or alternatively LLR as and from on 22 August 1985 up to the assignment of the Head Lease from KT1 to KT2, so substantially conducted or alternatively substantially procured and directed the management of KT1, as to assume legal responsibility or otherwise be liable for obligations and negligent acts and omissions of KT1 and its servants and agents Van der Lee, McConnell, Wright and Griffith.

The four named persons are four of the claimants.

38 Some of the cross-claims were served on the claimants with a letter of 4 March 2002, in the following terms:

I enclose a Cross Claim issued out of the Supreme Court of NSW in which you are named as a cross defendant.

The proceedings have been brought by the plaintiff claiming damages, inter alia, against the State of New South Wales (and other state interests) arising from losses claimed to have been incurred as a result of the landslide which happened in Thredbo village in July 1997. There are a number of other similar suits.

You will no doubt recall that the State Coroner after a lengthy inquest decided that the landslide was triggered when water from a leaking watermain saturated the south-west corner of the fill embankment of the Alpine Way. He also determined that one of the three principal causes of the landslide was that the watermain was constructed of materials which could not withstand the movement of the ground in which it was laid.

The Supreme Court of NSW is not bound by the Coroner's findings. Amongst the many issues which it is called upon to determine, there are a range of geotechnical and engineering issues which address the cause of the landslide. It has ordered that these issues be determined separately from others. That determination will commence on 15 April 2002. A period of nine weeks has been set aside for the hearing of those questions.

When the proceedings were last before the Court on 22 February 2002, counsel for the Lend Lease Corporation Limited instructed by Freehills, solicitors, told the Court that neither he nor Freehills would be representing you.

I appreciate that you may be concerned that your involvement in the proceedings may be expensive, inconvenient and time consuming. I am happy to discuss with you, in advance of the hearing, what arrangements can be made between my clients and you to minimize your participation in the proceedings.

If you wish to discuss the matter with me, in the first instance, please telephone me to arrange a meeting at which we can discuss, more fully, the matters touched upon in this letter.

39 On 18 March 2002, there was a conversation between Stephen Klotz, solicitor for the claimants, and Christine Moorhouse, a solicitor acting for the State interests, in the following terms:

3. On 18 March 2002, I telephoned Moorhouse to let her know that I had been instructed by the individuals, that I was aware that Mr Hagley had been served in these and the Rarida proceedings and that i had instructions to accept service in those two proceedings on behalf of the others. Our conversation then continued to the following effect:
I said: Do you intend to join my clients in any of the other proceedings?

She said: Yes. They have been joined in all of the commercial claims. Do you have instructions to accept service in those claims too?

I said: I don't. But you should assume that I will get those instructions. Can you tell me how much you are claiming against my clients and others by way of contribution or indemnity?

Initially, she said that she was unable to answer that because she did not know, but after I pressed her, the conversation continued to the following effect:
She said: KT2's claim is in the order of $25 million, but that does not include its loss of profits claim.

I said: What about the additional claims for contribution and indemnity including payments to relatives and reconstruction of the road?

She said: The relatives were paid about $4 million. The reconstruction of the road cost in the order of $40 million to $50 million.

I said: So your clients are claiming by way of indemnity or contribution at least $65 million to $75 million?

She said: Yes.

I said: What do you expect to get from my clients?

She said: Well, my clients were put in a difficult position by the de-registration of KT1.

I said: That doesn't really answer my question. Why have you joined my clients?

She said: You will have noticed that Lend Lease Corporation and Lend Lease Residential have been joined as well.

I said: I did notice that, but that is an extraordinary thing to say in response to my question? What do you mean?

She said: That is their connection with the matter. They are former Lend Lease employees. It is hoped that Lend Lease will stand behind its former employees. We're off the record now.

I said: No, we're not. I still don't follow how that is an answer to my question.

She said: We are expecting to get a contribution from each of them.

I said: Do you have any idea of their assets? Have you done an asset search in respect of any of them?

She said: No. I had better talk to our senior counsel before I answer any more of your questions.

40 On 19 March 2002, a letter was sent by Mr. Klotz to Ms. Moorhouse, in the following terms:

As you know we act for Messrs van der Lee, McConnell, Wright, Griffiths and Hagley in the above proceedings.

We understand that, by the Cross Claims joining our clients in these proceedings, your clients are claiming the same relief against our clients, Lend Lease Corporation Limited and Lend Lease Residential Pty Limited namely damages and indemnity and/or contribution in an amount in excess of $69 million.

It is inconceivable to us that your clients have any expectation that they will obtain damages or an indemnity or contribution from our clients other than in an amount which would be meaningless in the context of the amount being claimed against them. Indeed, you have indicated that you have not carried out any search to ascertain whether or not any of our clients have assets that are capable of satisfying, even in small part, any judgment that may be obtained against them.

We are informed by Mr Geoff McClellan, whom you know is the solicitor for Lend Lease Corporation Limited and Lend Lease Residential Pty Ltd in these proceedings, that, on 7 March 2001, Mr McClellan attended a conference with Mr Peter Garling SC, your clients' Senior Counsel, at his request at his chambers. There was conversation between Mr McClellan and Mr. Garling SC, in which Mr Garling SC explored with Mr McClellan whether your clients could avoid joining Mr McClellan's clients to these proceedings by an agreement to a contribution arrangement. When Mr McClellan stated that his client was not interested in any contribution arrangement, Mr Garling SC replied that there were certain things that Mr McClellan should consider, one of which was expressed in words to the following effect:
"...could sue the individuals, for example, the engineer responsible for the installation, and let Lend Lease decide whether or not it will abandon them. I really don't think that Lend Lease would want to be seen from an employee policy point of view as not meeting any liability of those individuals. "


The strategy outlined by Mr Garling SC has it seems been implemented by the issue of the Cross Claims against our clients, which strategy was recently confirmed by you in your recent telephone conversation with our Mr Klotz.

It appears to us that the predominant purpose of your clients' Cross Claims against our clients, is not to recover any damages or indemnity or contribution from our clients but for the purpose of forcing Lend Lease Corporation Limited and Lend Lease Residential Pty Limited to provide your clients with an indemnity or contribution because of moral (rather than legal) obligation owed to our clients.

We have been instructed to apply to the Court for orders that the Cross Claims brought against our clients be stayed or dismissed on the basis that their continuation would constitute an abuse of process.

However, before we do so, we invite your clients to discontinue the Cross Claims brought against our clients.

Please will you respond by 5:00pm on Thursday, 21 March 2002, failing which we will make the application as foreshadowed.

Before Adams J, there was objection taken to that letter, and in particular to the reference in it to the conversation of 7 March 2001.

41 A reply to that letter was sent on 21 March 2002, signed by another solicitor acting for the State interests, Lynn Boyd, in the following terms:

I refer to your letter dated 19 March 2002.

The conversation between Mr Garling SC and Mr McClellan was without prejudice. In any event, your account of part of the conversation does not faithfully reflect the effect of the whole of the conversation.

Your clients should not be in any doubt that claims were brought against your clients with the intention of prosecuting them to finality and recovering under judgments thus obtained. There is no contrary "strategy" and to the extent that your letter suggests that Ms Moorhouse stated that there was, your letter is in error. Your letter disregards the prospect of recovery of significant moneys from your clients, as opposed to a large proportion of the very large amount claimed. It also ignores the fact that prosecuting the claim against your clients does not extend the range of evidence which will have to be addressed. Their acts and omissions are at the heart of all claims made in the cross claim to which they are parties. A suggestion that there is not a prospect of recovery of significant moneys from your clients would come as some surprise to me. Inter alia, Mr. Hagley was Managing Director of Lend Lease Leisure Pty Limited and a director of Kosciusko Thredbo Pty Limited for 16 years, for part of which time he was Managing Director. Thereafter Mr Hagley was appointed a director of MLC Insurance Limited. Mr Van der Lee was a director of Kosciusko Thredbo Pty Limited for 15 years. That being said, and as Senior Counsel stated to the Court, I would be surprised and your clients would no doubt be more than a little disappointed, if Lend Lease Corporation Limited were to require employees of its group of companies to meet from their own resources liabilities to persons affected by torts committed in the course of their duties as servants.

I note from your email of 18 March 2002 that you had received instructions to act for Messrs Van der Lee, McConnell, Wright and Griffiths before they were served with any cross claim joining them to these proceedings, and before any intimation had been given to them by or on behalf of my clients, of any intention to join them.

Your letter suggests that your clients do not have any significant assets. I note that you have invited my clients to discontinue the cross claims brought against your clients. In order for me to properly consider that request, please provide me with the following information:

1. What are the assets of each of your clients?

2. Do any of your clients presently anticipate that their asset position will significantly change in the foreseeable (sic) future and, if so, how?

3. What insurance cover does each of your clients have which is material to their prospective liability in respect of the claims? and

4. From what other sources is it anticipated that judgments against each of your clients could be satisfied?

42 On 22 March 2002, Mr. Klotz responded in the following terms:

We refer to your letter dated 21 March 2002.

In the event that our clients are forced to make an application to the Court for the dismissal of the Cross Claims brought against them on the ground that they are an abuse of the Court's process, they will rely on an affidavit sworn by Mr McClellan setting out the whole of his conversation with Mr Garling SC.

We respond to your request for information as follows.

1. I am instructed that:

(a) Mr Griffiths is semi-retired and earns some money mowing lawns on average four days a week. He owns his home at Ningi, Queensland, which he believes is valued at $100,000 with a mortgage of $20,000 over it. He has about $120,000 invested in superannuation and a motorcar which he values at $8,000;
(b) Mr Wright is a salaried employee of Australian Water Services Pty Ltd. He and his wife jointly own their home at Noosaville, Queensland and a house at Deception Bay, Queensland, which properties Mr Wright believes are together worth about $450,000. Both properties secure by way of mortgage a $250,000 loan facility. Mr Wright has a car which he believes to be worth about $10,000 and $20,000 invested in superannuation;

(c) Mr McConnell earns a salary package as the Director of Property and Development on Hamilton Island. He was recently divorced and lives in rented accommodation. His assets comprise $40,000 to $50,000 in a cash management account and $140,000 invested in superannuation;

(d) Mr van der Lee is semi-retired and does some work for a charity. His assets are comprised of a property at Thredbo which he values at about $330,000, shares in Lend Lease Corporation worth about $20,000, $5,000 invested in a managed fund, about $5,000 in cash, a car which he values at about $10,000 and furniture and equipment which he values at $5,000;

(e) Mr Hagley works as a property development consultant to a company unrelated to Lend Lease Corporation. His assets are comprised of his home at Epping, New South Wales, which he owns jointly with his wife, which is unencumbered and which he believes is valued at around $600,000, $1.2 million to $1.3 million invested in superannuation, a boat, which he values at about $250,000, and shares valued at $10,000.

2. No.

3. Our clients have not effected any insurance. Whether or not their previous employer, KT1, effected any insurance for their benefit is not within their knowledge.

4. It is not anticipated that judgments against any of our clients could be satisfied from other sources.

In the light of the above information, it could not be seriously contended that the State of New South Wales, if successful against all of the individuals, could even hope to obtain from them a significant contribution towards its legal costs in these proceedings.

Please let us know what your clients' attitude is by 5:00pm on Tuesday, 26 March 2002. If this matter cannot be resolved, our clients have instructed us to make the application threatened earlier.

43 The claimants’ Notices of Motion were filed on 28 March 2002.

PRIMARY JUDGE’S DECISION

44 The hearing before Adams J took place on 5 April 2002. Evidence was read on the voir dire of the conference of 7 March 2001. The effect of that evidence was set out as follows in the judgment of Adams J:

7 It is convenient that I should refer to some matters that occurred in the conversation between them and I use as my starting point the affidavit of Mr McClellan. He says that Mr Garling, no doubt after some irrelevant conversation, said -
“In respect of a number of the civil claims Lend Lease has not been joined, in particular in respect of the KT2 and Brindabella claims, which are probably the two claims where there was real damage. The current timetable involves defences and cross-claims being filed on or by the 10th of April. The Government needs to decide whether it is going to seek to cross-claim against Lend Lease and create an issue in the proceedings in relation to the geo-technical matters. Obviously questions which are relevant are not only whether the Government will bring those cross-claims in those proceedings but also whether they will seek to cross-claim for contribution in relation to the existing proceedings.”

8 Mr Garling then said:
“I wanted to explore with you whether this can be avoided and whether we can agree to some...arrangement whereby it isn't necessary for the Government to join Lend Lease.”

Mr McClellan responded by saying amongst other things -
“With respect to the civil claims, Lend Lease will take all points.”

After making reference to the possible basis of liability he added -
“The other difficulty I see in any arrangements that you are proposing, is who are you going to sue? Lend Lease Corporation simply is not liable on any view.”


9 Mr Garling then replied that Mr McClellan or, more precisely, his client should consider three matters. The first of them was the possibility that a subsidiary company (called KT1) of LLC which had since been wound up should be restored to the register, to which Mr McClellan responded in effect that that had nothing to do with Lend Lease. Mr Garling then said that the individuals allegedly responsible for the installation could be sued, and LLC would then need to consider whether or not it would "abandon them", pointing out that he did not think that "Lend Lease will want to be seen from an employee policy point of view as not meeting any liability of those individuals".

10 There was a third matter relating to what might be in the commercial interests of LLC, which it is unnecessary for me to set out here but which is contained in a confidential exhibit marked GAM1. I think it fair to say, however, that this consideration was an obvious one that any commercial enterprise involved in substantial litigation would need to consider.

Part of an affidavit by Mr. Garling was also read on the voir dire, setting out his version of part of the conversation; but Adams J considered, in my opinion correctly, that this did not make any significant difference. Mr. Garling did not give evidence concerning his subjective intentions in that conversation, and he was not cross-examined.

45 In his judgment, Adams J held that s.131 of the Evidence Act precluded evidence of the conversation of 7 March 2001; and that the circumstance that it could possibly be evidence of an abuse of process did not bring it within any of the exceptions in s.131(2). In so holding, Adams J referred to Idoport Pty. Limited v. National Australia Bank Limited [2001] NSWSC 222. He also held that the position was not affected by s.11 of the Evidence Act.

46 Adams J went on to hold that, if he was wrong on the question of admissibility, he was still not satisfied that the proceedings against the claimants amounted to an abuse of process, referring to Williams v. Spautz (1992) 174 CLR 509 at 577.

DRAFT NOTICES OF APPEAL

47 The claimants seek leave to rely on the following grounds of appeal:

A. Admissibility of the Conversation:
1. Justice Adams erred in holding that the conversation (the “Conversation") deposed to in the affidavit of Geoff Alan McClellan, sworn on 27 March 2002, was inadmissible.

2. Justice Adams erred in failing to hold that the Conversation was admissible at common law, regardless of section 131 of the Evidence Act.

3. Justice Adams erred in failing to hold that the Conversation was admissible because of the 'exceptions' provided for in subsections 131 (2) (b), (c), (g) and (k) of the Evidence Act.

B. Notice to Produce:
4. Justice Adams erred in holding that the Respondents were not required to answer the call for documents falling within paragraph 1 of the Appellants' Notice to Produce dated 4 April 2002.

5. Justice Adams erred in holding that the form of paragraph 2 of the Appellants' Notice to Produce dated 4 April 2002 was too wide.

C. Abuse of Process:
6. Justice Adams erred in failing to hold that the Respondents issued and continued the Cross Claims (the “Cross Claims") brought by them against the Appellants, not for the purpose of enforcing judgment against the Appellants, but for the purpose of putting pressure on Lend Lease Corporation Limited and Lend Lease Residential Pty Limited to agree to contribute to the settlement of the Thredbo Litigation.

7. Justice Adams erred in holding that the issue and continuation of the Cross Claims did not constitute an abuse of process.

8. Justice Adams erred in dismissing the Appellants’ Notices of Motion.

EVIDENCE ACT

48 The application requires consideration of ss.11, 131, and cl.9 of Pt.2 of the dictionary of the Evidence Act 1995 (NSW), which are as follows:

11(1) The power of a court to control the conduct of a proceeding is not affected by this Act, except so far as this Act provides otherwise expressly or by necessary intendment.
(2) In particular, the powers of a court with respect to abuse of process in a proceeding are not affected.

…

131(1) Evidence is not to be adduced of:
(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or
(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
(2) Subsection (1) does not apply if:
(a) the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent, or
(b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute, or
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced, or
(d) the communication or document included a statement to the effect that it was not to be treated as confidential, or
(e) the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute, or
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue, or
(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence, or
(h) the communication or document is relevant to determining liability for costs, or
(i) making the communication, or preparing the document, affects a right of a person, or
(j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or
(k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power.
(3) For the purposes of subsection (2) (j), if commission of the fraud, offence or act is a fact in issue and there are reasonable grounds for finding that:
(a) the fraud, offence or act was committed, and
(b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act,
the court may find that the communication was so made or the document so prepared.
(4) For the purposes of subsection (2) (k), if:
(a) the abuse of power is a fact in issue, and
(b) there are reasonable grounds for finding that a communication was made or document prepared in furtherance of the abuse of power,
the court may find that the communication was so made or the document was so prepared.
(5) In this section:
(a) a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding, and
(b) a reference to an attempt to negotiate the settlement of a dispute does not include a reference to an attempt to negotiate the settlement of a criminal proceeding or an anticipated criminal proceeding, and
(c) a reference to a communication made by a person in dispute includes a reference to a communication made by an employee or agent of such a person, and
(d) a reference to the consent of a person in dispute includes a reference to the consent of an employee or agent of such a person, being an employee or agent who is authorised so to consent, and
(e) a reference to commission of an act includes a reference to a failure to act.
(6) In this section:
"power" means a power conferred by or under an Australian law.

Part 2
9(1) A reference in this Act to a law of the Commonwealth, a State, a Territory or a foreign country is a reference to a law (whether written or unwritten) of or in force in that place.
(2) A reference in this Act to an Australian law is a reference to an Australian law (whether written or unwritten) of or in force in Australia.

SUBMISSIONS

49 Mr. Ellicott QC for the claimants submitted that the conversation of 7 March 2001, the conversation of 18 March 2002, and the ensuing correspondence, showed that the predominant purpose of the State interests in bringing the proceedings against the claimants was not to recover damages, contribution or indemnity from the claimants, but to compel LLC to make a contribution to the settlement of the claims against the State interests, in circumstances where LLC had no legal liability to do so. That this was the predominant purpose was shown by a number of circumstances: first, Mr. Garling and Ms. Moorhouse in effect stated as much; second, there was the threat that if LLC wanted to do business in this State, it should not take the corporate entity point against the government; next, the quantum claimed was in excess of $75 million, yet the State interests did not know or care what assets the claimants had and did not even undertake any property search in relation to them; and in fact, the assets of the claimants were minute by comparison, and could be expected to be eaten up by the costs of defending the claims.

50 Accordingly, Mr. Ellicott submitted, the predominant purpose in bringing the proceedings against the claimants was to use them as a means for obtaining an advantage for which the proceedings was not designed or some collateral advantage beyond what the law offers: see Williams v. Spautz (1992) 174 CLR 509 at 520, 522, 526, 529-30, 535-7; and Flower & Hart v. White Industries (Qld) Pty. Ltd. (1999) 87 FCR 134 at 150.

51 Next, it was submitted for the claimants that the evidence was admissible, pursuant to s.131(2)(j) and (k) and/or s.11(2) of the Evidence Act. The right to “without prejudice” privilege and the exceptions thereto were common law rights: In Re Daintrey [1893] 2 QB 116, Field v. Commissioner for Railways (1957) 99 CLR 285. When construing a statute, the court would presume that the statute only alters the common law so far as necessary to give effect to the express provisions of the statute: Potter v. Minahan (1908) 7 CLR 277 at 304; Hocking v. Western Australian Bank (1909) 9 CLR 738 at 746; Sargood Bros v. Commonwealth (1910) 11 CLR 258 at 279; and Melbourne Corporation v. Barry (1922) 31 CLR 174 at 206. While s.131 of the Evidence Act appears to cover the field in relation to “without prejudice” privilege (Moran v. Moran [2000] NSWSC 151 at [8]) s.11(2) of the Evidence Act preserves the common law in relation to abuse of process, and s.131 of the Evidence Act does not contain any provision overriding this.

52 It was further submitted that at common law, without prejudice cannot be relied on by a party whose communication furthers or evidences an abuse of process: Daintrey at 120, Pitts v. Adney (1961) 78 WN(NSW) 886 at 889; Dataquest (Australia) Pty. Ltd. v. Dataquest Inc. (Tamberlin J, FCA 8/8/96), and Citicorp Aust. Limited v. Cirillo [2000] SASC 219 at [20].

53 As regards par.(k) of s.131(2), it was submitted that “deliberate abuse of a power” included the power to commence and pursue legal proceedings, which was a power conferred by or under an Australian law, that is Australian unwritten law: Kang v. Kwan [2001] NSWSC 698 at [37.12], to be preferred to Idoport at [64]. There were, it was submitted, reasonable grounds for finding that the communication was in furtherance of a deliberate abuse of a power: s.131(4).

54 As regards par.(j) of s.131(2), “fraud” includes equitable fraud and conduct in furtherance of an improper object; Southern Equities Corporation Limited (In Liquidation) v. Arthur Anderson & Co. (1997) 70 SASR 166 at 174; Citicorp v. Cirillo at [20]; to be preferred to Idoport at [63].

55 In any event, it was submitted that the power of the court with respect to abuse of process includes the power to receive evidence of abuse of process, and accordingly the common law exceptions as regards abuse of process were not excluded by s.131, either “expressly or by necessary intendment”.

56 Mr. Walker SC for the State interests submitted that no sufficient reason had been shown to grant leave: this was not a suitable case for examination of the law concerning abuse of process.

57 Mr. Walker submitted that the primary judge was not wrong to find abuse of process not established. Generalised disapproval of statements made on behalf of the State interests could not justify such a finding. The charge of abuse of process was a serious charge, and there was a heavy onus to show this: Spautz. There was no suggestion that the claim of the State interests against the claimants or LLC was without reasonable grounds. The claimants had substantial assets (over $1 million in aggregate), and it was wrong to suggest that a litigant should not sue defendants because its total claim was large rather than small; and in any event, the assets of the claimants could turn out to be more than they suggest, they could have insurance, and the evidence showed that LLC was in fact paying their costs.

58 In any event, Mr. Walker submitted, it was not an abuse of process to suggest that a person should act, as a matter of decency, in a way not required by law. For example, an action might be brought against a son without assets, knowing that the father may pay the judgment to prevent the son’s bankruptcy. Such a purpose would be “reasonably related” to the order obtained, within the statement of principle by Brennan J in Spautz at 537. LLC had had the benefit of KT1’s venture and had caused it to be wound up and de-registered. It was reasonable for the State interests, having been caused damage by KT1’s negligence, to say that LLC should meet KT1’s obligations; and also to say that if it does not, why should the State interests deal with LLC in future?

59 Turning to admissibility, Mr. Walker submitted that “fraud” in s.131(2)(j) required actual dishonesty, and “deliberate abuse of a power” in par.(k) required actual knowledge that power was being abused. In circumstances where Mr. Garling had not been cross-examined, these findings could not be made. In any event, Mr. Walker submitted, the narrow construction put on these terms in Idoport was correct; and furthermore, the conversations involving Mr. Garling could not be considered to be “in furtherance” of an abuse alleged to have occurred nearly a year later when the proceedings were commenced.

60 In relation to s.11(2), Mr. Walker conceded there was force in the claimants’ submissions, but submitted that the provision was limited to the exercise of power to control abuse, and did not extend to the receipt of evidence.

DECISION

61 As regards admissibility, I am inclined to adhere to views expressed in Idoport to the effect that “fraud” in par.(j) of s.131(2) requires actual dishonesty; that “a power” in par.(k) does not include a “power” to bring legal proceedings; and that “deliberate” in par.(k) requires that the person concerned must be aware that he or she is abusing power. (The decision in Idoport did not in fact relate to those paragraphs, but rather to similar provisions concerning loss of client legal privilege in s.125 of the Evidence Act; but in my opinion the provisions must mean the same in both places.) There is, with respect, merit in the view of Santow J in Kang that a power to commence legal proceedings is a power conferred by or under an unwritten Australian law: however, I am still inclined to think that “a power” in par.(k) is referring to something more specific, and something pursuant to which rights can be more directly affected, than the very general right which everyone has to commence proceedings in a court.

62 However, it is not necessary to determine that question in this case. I think s.11(2) does have the effect that, when evidence is tendered that could be evidence of an abuse of process, albeit evidence of without prejudice settlement negotiations, the Court may receive that evidence on the voir dire; and then, if that evidence does either by itself or in combination with other evidence establish an abuse of process, the Court may rule the evidence admissible and make appropriate orders to deal with that abuse of process. In my opinion, the powers of a court with respect to abuse of process include its powers to receive evidence, and in my opinion the authorities relied on by the claimants show that, at common law, communications evidencing abuse of process will not be protected by without prejudice privilege. I do not think that s.131 provides otherwise, either expressly or by necessary intendment, particularly if s.132(2)(k) does not apply in cases of abuse of process.

63 Turning to the question whether abuse is shown in this case, I accept Mr. Walker’s submission that the claimants cannot fairly be regarded as “men of straw”. I accept his submission that it is not incumbent on persons bringing proceedings first to investigate the means of defendants, and I accept his submission that persons bringing proceedings should not have less right to bring proceedings because their claim is large rather than small. In my opinion also, there are legitimate tactical reasons for suing employees or agents as well as employers or principals, even though it may be expected that the substantial recovery will be from the employer or principal. And it is undisputed in this case that the State interests did have reasonably arguable grounds for taking proceedings against both the claimants and against LLC, and for alleging vicarious liability in LLC for the acts of the claimants.

64 In those circumstances, even giving full weight to the communications relied on, I would not be satisfied that the predominant purpose of the State interests in bringing the proceedings against the claimants was to pressure LLC into doing something which it was under no legal liability to do.

65 Furthermore, even if this were the predominant purpose, this would not necessarily make the proceedings an abuse of process. In my opinion, if one has reasonable grounds to sue X, who has few assets, and believes that Y, who has extensive assets, may feel obliged to satisfy the judgment obtained against X, and if one then sues X with the predominant purpose of recovering from Y, I do not think this is necessarily an abuse of process. The question in such a case would be whether this is for the purpose of gaining a “collateral advantage” rather than for a purpose for which the proceedings were designed and exist, or alternatively to obtain a benefit not “reasonably related” to an order that could be obtained in the proceedings. There is no hard and fast line here: it is very much a matter of judgment. Where a holding company has had the benefit of a subsidiary’s enterprise, and has then caused it to be liquidated and de-registered, it may be reasonable for a litigant to sue employees of the subsidiary who have caused damage to the litigant in the course of their employment by the subsidiary, in the hope that the holding company will feel obliged as a matter of commercial morality to stand behind them. This is not inconsistent with the holding company having no legal obligation to do so, or even with it reasonably considering for its part that it has no moral obligation to do so.

66 In this case, the onus was squarely on the claimants to show that for the State interests to act in this way would be for the predominant purpose of gaining a collateral advantage, or a benefit not reasonably related to such judgment as might be obtained against the employees; and I am not satisfied that they have discharged that onus. Certainly I am not satisfied that Adams J was wrong in not being so satisfied.

CONCLUSION

67 Although this matter was of great significance to the claimants, involved an issue which could have finally determined the proceedings one way or the other, and raised possibly significant questions of law, in the end the matter came down to one of whether the primary judge was or was not correct in a matter of judgment; and I think the appropriate order is that leave to appeal should be refused with costs.

68 SANTOW JA: I agree with Hodgson JA. This is with the qualification that while there is, with respect, merit in the view of Hodgson CJ in Eq in Idoport Pty Limited & Anor v National Australia Bank Limited Ors [2001] NSWSC 222, I am inclined to prefer the view that I expressed in Kang v Kwan [2001] NSWSC 698 at [37] as to the meaning of the equivalent provisions of s.125 of the Evidence Act 1995 though in any event I agree that s.11(2) of the Evidence Act allows admission of the relevant evidence for the reasons stated by Hodgson JA.

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