The background to this matter is set out in the decision of her Honour Hill J in Rhodes v de Castro [2022] WASC 214. In that decision her Honour dismissed the plaintiff's application for summary judgment. That background may be summarised as follows.
On 4 August 2021, the parties entered into a 'Deed of Settlement and Release'. Under that agreement, the defendant was required to transfer to the plaintiff 150,000 units in the Rehawk Property Group Unit Trust (Trust), or units to the value of $500,000, whichever was higher, by 11 August 2021. On 5 August 2021, the defendant proffered the transfer of 150,000 units but the plaintiff claims they were worth considerably less than $500,000. The defendant denies that the 150,000 units were worth less than $500,000. The plaintiff claims damages for the defendant's alleged failure to abide by the obligation to transfer units in the value of $500,000. The central issue in these proceedings is therefore the value of units in the Trust as at 5 or 11 August 2021.
The principal asset of the Trust is a hotel known as Ibis Styles East Perth (Hotel). The value of the Hotel and in turn, the units in the Trust are therefore the principal matters for determination in these proceedings.
In support of its position, the plaintiff has produced two valuation reports on which he intends to rely. One is a valuation of the Hotel and the other is a valuation of the Trust. The valuation of the Trust rests largely on the valuation of the Hotel. As might be expected, the valuation of the Hotel is a lengthy and comprehensive document that relies on and analyses information from a wide variety of sources, including information regarding the hotel industry generally and in particular comparable sales and the analysis of those sales. The documents relied upon by the valuer were identified in his valuation report.
The defendant does not propound its own case as to the value of the Hotel or the Trust. In broad terms, the defendant's position is that the plaintiff is required to prove that the 150,000 units that it tendered were worth less than $500,000, and the plaintiff has not or will not establish that to be so.
In support of its position, the defendant has raised a very considerable number of objections to the documents relied upon by the valuer of the Hotel. The defendant also objected to many parts of the expert valuations; both on the basis of its reliance upon documents to which the defendant objected and other independent objections.
The early resolution of those objections is necessary to ensure the efficient management of the conduct of the proceedings overall, and of the trial in particular. In those circumstances, all the objections were listed to be heard over a three‑day period from 20 to 22 March 2023. I received written submissions from each side and oral submissions over 20 and 21 March. On 22 March, I received further affidavit material on behalf of the plaintiff.
In the interests of time, my rulings on each of the individual objections, will be delivered orally on 24 March 2023. These reasons deal only with some overarching matters of principle that are relevant to many of the objections and I set out select examples of the application of those principles to the contentious documents.
As I have noted, the valuation report for the Hotel relies upon many documents that contain information deployed by the valuer in his reasoning and analysis. The valuer utilised that information in a variety of ways.
For example, one element that may commonly feature in the assessment of the value of a hotel is the terms of any management agreement, and in particular the fee payable under the management agreement. Plainly, the quantum of the fee may impact on the financial viability and thereby the value of a hotel. In that regard, the valuation of the Hotel includes an assessment of whether the terms of the management agreement for the Hotel are consistent with other similar hotels in the market. To that end, the valuer looked at the terms of other management agreements in comparable hotels, including the management fee. The valuer took that information regarding other management fees from various documents.
By way of further example, in relation to his evaluation of comparable sales, as one would expect, the valuer analysed various aspects of those sales relying upon a raft of information regarding those hotels. That information includes things such as the number of rooms, the nature of the various rooms, the financial terms of the management agreement, the room rates, the yearly yield, internal rate of return and the projected yield. Again, the valuer took that information from various documents.
In support of his position in relation to the admissibility of the contentious documents, several affidavits were filed on the plaintiff's behalf. The relevant affidavits were:
[2]
(a) Third affidavit of William Sutherland (sworn 15 March 2023);
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> (b) Fourth affidavit of William Sutherland (sworn 22 March 2023);
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> (c) Third affidavit of Roselina Kruize (sworn 17 March 2023);
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> (d) Fourth affidavit of Roselina Kruize (sworn 21 March 2023); and
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> (e) Fifth affidavit of Roselina Kruize (sworn 22 March 2023).
[3]
Mr William Sutherland is the valuer of the Hotel who prepared the valuation report. In the affidavits referred to above, he provides evidence of certain terms used in his valuation report and explains the source of various data he has relied upon. He also provides evidence in relation to various other documents to which objection was taken, and their provenance.
Ms Roselina Kruize is a lawyer employed by Piper Alderman, the solicitors acting for the plaintiff. In her affidavits, she provides evidence relating to the provenance of various documents to which objection was taken. This included an explanation of documents that were returned on subpoena and provided copies of those subpoenas and an explanation of which documents were returned pursuant to the various subpoenas and the class of documents described in the subpoenas. Ms Kruize also provided background information to explain various other documents, and in particular information regarding Airport Apartments Pty Ltd.
Much of the information contained in these affidavits is relevant only to my oral rulings in relation to a number of objections. I have therefore not dealt in any detail with the content of those affidavits in these reasons. However, I have relied in part on the content of those affidavits to draw inferences as to the admissibility of documents under s 79C, particularly in relation to documents returned on subpoena.
I turn now to a selection of the types of documents from which the valuer took the relevant information for the purposes of his valuation report of the Hotel.
A number of the hotels included in the valuer's analysis were sold in the years leading up to August 2021. As is commonly the case, the sales of those hotels were managed by large, reputable real estate companies with a national or international presence. They included Jones Lang LaSalle, CBRE and Colliers International. For each sale, the real estate company (and sometimes more than one jointly) produced an 'Information Memorandum'. The Information Memorandum in each case was a fairly comprehensive document, self‑evidently prepared by the agent for the purpose of providing a summary of information regarding the hotel to potential buyers. It contained a summary of key features of the hotel such as the number and types of rooms, other hotel facilities and an overview of the financial information of the sort utilised by the valuer in the manner referred to above, such as the management fee, occupancy rates, and historical and projected profits and yields. The Information Memorandum generally included photos of the hotel, its accommodation and other facilities and general surrounds. In some of the Information Memoranda, the source of the information was expressly stated to be the hotel owner, but it was otherwise reasonable to infer from the document as a whole and the circumstances of its preparation that the agent had collated the content from information ultimately provided by those who owned and/or managed the hotel based on documents held by the owner and/or the manager. Generally, although not invariably, the Information Memorandum contained a disclaimer in fairly standard, boilerplate terms, disclaiming liability for the accuracy of the information provided.
The defendant objected to the admission into evidence of the Information Memoranda, or more particularly, the relevant statements relied upon by the valuer, primarily on the basis of hearsay. The plaintiff accepted that the documents contained hearsay evidence but contended they were admissible under s 79C of the Evidence Act 1906 (WA).
(1) Subject to subsection (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if the statement -
[5]
(a) was made by a qualified person; or
(b) directly or indirectly reproduces or is derived from one or other or both of the following -
(i) information in one or more statements, each made by a qualified person;
(ii) information from one or more devices designed for, and used for the purpose of, recording, measuring, counting or identifying information, not being information based on a statement made by any person.
[6]
(2) Where a statement referred to in subsection (1) is made by a qualified person or reproduces or is derived from information in a statement made by a qualified person, that person must be called as a witness unless -
[7]
(a) he is dead;
(b) he is unfit by reason of his bodily or mental condition to attend or give evidence as a witness;
(c) he is out of the State and it is not reasonably practicable to secure his attendance;
(d) all reasonable efforts to identify or find him have been made without success;
(e) no party to the proceedings who would have the right to cross examine him requires him to be called as a witness;
(f) having regard to the time which has elapsed since he made the statement and to all the circumstances, he cannot reasonably be expected to have any recollection of the matters dealt with in the statement;
(g) having regard to all the circumstances of the case, undue delay, inconvenience or expense would be caused by calling him as a witness; or
(h) he refuses to give evidence.
[8]
(2a) Notwithstanding subsections (1) and (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if -
[9]
(a) the statement is, or directly or indirectly reproduces, or is derived from, a business record; and
(b) the court is satisfied that the business record is a genuine business record.
[10]
It must first be observed that the generality of the sections should not be read down. They are remedial provisions which should be construed liberally and not pedantically.[1]
The statutory provisions were considered by Beech J in McKay v Commissioner of Main Roads [No 2] and by Edelman J in Agricultural Land Management Ltd v Jackson.[2] The relevant principles that arise from their Honours' consideration may be summarised by the principles set out below.
Section 79C makes a statement in a document admissible notwithstanding, among other things, the rule against hearsay and the rule against secondary contents of documents. Section 79C permits second‑hand or 'double' hearsay.
The section provides two avenues of admissibility. The first avenue relates to documents generally (subsections (1) and (2)) and the second relates solely to business records (subsection (2a)).
Section 79C renders statements in a document admissible, not (necessarily) the whole document.
Section 79C(1) does not necessarily require the identification by name of the maker of the statement.
Section 79C(2a) is not restricted to statements made by a qualified person or derived from such a statement.
The definition of the term 'business record' found in s 79C(2a) contains alternative limbs of 'prepared' or 'used'. Therefore, in the application of s 79C(2a) two questions arise:
[11]
(a) First, was the document 'prepared' by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business?
>
> (b) Second, was the document 'used' in the ordinary course of that business for the purpose of recording matters relating to that business?
[12]
Whether the document was prepared in the ordinary course of business or used in the ordinary course of business, that preparation or use must be for the purpose of recording any matter relating to that business. The weight of authority is that it need not be the sole or even the dominant purpose; it is enough that it is a substantial purpose.
Where the document was not prepared by the person or entity carrying on the relevant business, but the business used an externally generated document as a record of information relating to its business, it does not thereby use the document 'for the purpose of recording any matter relating to the business' unless there is, or it is contemplated that there will be, some further or ongoing recording of information by or on behalf of the business.
That limitation requiring further recording of information applies only where reliance is placed on the 'use' alternative within the definition of business record. If the document was 'prepared' by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business, no further recording of information is required.
The plaintiff contended that the relevant statements in the Information Memoranda came within the terms of s 79C(2a). That was put on alternative bases. First, it was submitted that each of the Information Memoranda (or more precisely, the relevant statements within them relied upon by the valuer) were themselves a business record. Alternatively, it was submitted that each relevant statement directly or indirectly reproduced, or was derived from, a business record.
Before turning to a consideration of those contentions, I note three other statutory provisions that bear upon the issues. First, s 79C(2a)(b) requires the court to be satisfied that the relevant business record is genuine. Secondly, s 79C(5)(a) provides that in deciding whether a statement is admissible for the purposes of s 79C, the court may draw any reasonable inference from the form or contents of the document in which the statement is contained or from any other circumstances. The discretion conferred upon the court to draw inferences in the application of s 79C is cast in the widest possible terms. Thirdly, s 79C(6) confers upon the court a discretion to reject a statement even though it may fulfil the require of admissibility of s 79C. In my view, that is a statutory recognition that the strict application of s 79C may in some circumstances operate unfairly and needs to be tempered by some judicial discretion.
I also observe more generally that the admission of a statement under s 79C does not of itself prove conclusively the truth of the statement. The weight to be accorded to the statement remains an issue at large. Further, there is nothing to prevent a party from undermining the correctness of the statement by the ordinary processes of litigation such as through the tender of other documentation, oral evidence or by cross‑examination.
Bearing those principles in mind, I turn to the question of whether the relevant statements in each of the Information Memoranda are admissible under s 79C(2a). First, the relevant statements contained in the Information Memoranda are matters of fact and direct oral evidence of those facts would be admissible. Counsel for the defendant suggested that the quantum of the management fee was not a 'fact' but rather a legal conclusion on the basis of the proper construction of the management agreement. It is theoretically possible that the management fee may in a particular case require a complex exercise in contractual construction. There is no suggestion of that, and certainly no evidence of that, here. None of the Information Memoranda contain the slightest hint of any doubt about the management fee. It is reasonable in the circumstances to infer that the quantum of the management fee is derived from and stated in the management agreement and is ultimately a straightforward matter of fact, albeit derived from a contract.
Turning to the next element of the statutory provision, the statements in the Information Memoranda tend to establish those facts. Neither party contended otherwise. Nor did either party raise any issue regarding the genuineness of the asserted business record. The contentious issue was whether the relevant statements came within the definition of business record or were derived from a business record.
In that regard, the relevant question is whether the Information Memoranda were prepared by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business. I have given consideration to the contents of the Information Memoranda as a whole. I have also given consideration to the circumstances of their production. Those circumstances include that the documents were provided by the relevant agent or owner in response to a subpoena issued by the court, or were procured and provided by the valuer himself. The valuer himself has provided evidence that he has practised as a property valuer for in excess of 20 years and holds relevant tertiary qualifications and certification, is a licenced valuer and a member of various reputable professional organisations including being a professional member of the Royal Institute of Chartered Surveyors and a registered valuer with that institution.
Having regard to the relevant circumstances, in my view it is reasonable to infer, and indeed it is plain, that the Information Memoranda were prepared by a person employed by each of the relevant real estate agent companies and that they were prepared in the ordinary course of that real estate agent company's business. The real estate agent company's business includes the collation of information regarding a property for the marketing and sale of that property.
Counsel for the defendant submitted that the Information Memoranda were prepared for the purpose of marketing and selling the relevant hotel property. They were in substance a sophisticated form of advertising. Thus, although they may have been prepared by a person employed by the business in the ordinary course of that business and used in the ordinary course of that business, they were not prepared or used for the purpose of recording any matter relating to the business, but rather for the purpose of marketing and advertising.
In my view, having regard to the relevant circumstances, it is reasonable to infer that a purpose and quite probably the dominant purpose of the preparation and use of the Information Memoranda was marketing and advertising. However, it is also reasonable to infer that the document served other substantive purposes. One of those purposes was that the document and the statements it contained served as a convenient repository and reference point for information regarding the hotel property to be used by the real estate agency company in the ordinary course of its business, both for its own reference and to respond to enquiries for information. Although well-articulated and not without force, the construction contended for by counsel for the defendant was in my view overly narrow. That construction in effect tended to limit the words 'for the purpose of recording any matter relating to the business' to the making of a formal or internal record. By way of illustration, counsel for the defendant sought to distinguish an Information Memorandum of Jones Lang LaSalle from a document that he submitted properly came within the definition of 'business record'. In making that distinction, counsel submitted that it could not have been the purpose of Jones Lang LaSalle in preparing the document 'to prepare such a document for internal recordkeeping purposes'.
Adopting, as the court is required to do, a liberal and non pedantic construction of the words, the notion of 'recording any matter relating to the business' is qualitatively different from the notion of making a 'record' relating to the business. In its more expansive sense, the reference to recording embodies broadly the preservation of things in writing as knowledge or information, rather than the notion of the written preservation for some more formal, internal or official process (see the varying definitions in the Shorter Oxford Dictionary).
A number of cases in this court have cautioned against relying upon the authorities in other jurisdictions where the wording of the statutory provisions contains significant differences to the Evidence Act 1906 (WA). Nevertheless, I observe that the South Australian legislation, the Evidence Act 1929 (SA) contains in its equivalent provisions regarding business records the following definition of business record:
[13]
any book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business ...[3]
[14]
That definition is the same as the definition of business record under the Evidence Act 1906 (WA). In particular, it also includes the requirement that the preparation or use must be for the purpose of recording any matter relating to the business.
That definition was considered by Lander J in Southern Equities v Bond.[4] Lander J stated that the relevant provisions are remedial in character, and they should be given 'the most liberal construction and any technical construction should be eschewed.'[5] Lander J went on to explain:
[15]
It follows that the following threshold matters are required to be established before s 45A can operate. First, the document sought to be tendered must be an apparently genuine document. Second, it must purport to be a business record, being a document which is prepared or used in the ordinary course of business. Third, if it is an apparently genuine document which has been prepared or used in the ordinary course of business it must have been prepared or used "for the purpose of recording any matter relating to the business". All three matters need to be established before the document can be admitted. If those matters are established then the document is admissible without further proof, and may be used as evidence of any facts stated in the record.[6]
[16]
In further discussion of the breadth of the statutory provisions, Lander J commented:
[17]
Business records are often compiled by a number of different persons and on information supplied by persons other than the collater of the records. Business records regularly include hearsay and often hearsay upon hearsay.[7]
[18]
The decision in Southern Equities was referred to by Bampton J in Lang v Davey.[8] That matter was an application for provision from a deceased estate under the Inheritance Family Provision Act 1972 (SA). The executors sought to tender a solicitor's letter of advice written within a few weeks of the testator's death as proof of the truth of the content of the letter. It was sought to be tendered as a business record. Bampton J explained that against the admission of the solicitor's letter as a business record, it was submitted that:
[19]
It was not possible to regard a lawyer's letter of advice as used in the ordinary course of a lawyer's practice "for the purpose of recording any matter relating to the business". It was argued that the letter did not record the testator's instructions in the ordinary course of practise but referred to them for the purpose of providing advice to another family member. That advice it was argued did not record any matter relating to the business but was, on the contrary, an act or action of the business, that is the performance of a business function, not a recording of any.[9]
[20]
Citing the approach of Lander J in Southern Equities, Bampton J held that the letter was admissible as a business record. Her Honour explained:
[21]
There is no dispute that a solicitor's practice is a business. As articulated by Lander J in Southern Equities, before s 53 can operate to permit admission of the Playford letter, three threshold matters must be established. The first is that the Playford letter is "an apparently genuine document". There was no suggestion it is not. Secondly it must be a business record. A solicitor's letter to a client providing advice is a document prepared or used in the ordinary course of business. I am satisfied it is a business record. Thirdly if it is an apparently genuine document which has been prepared or used in the ordinary course of business, it must have been prepared "for the purpose of recording any matter relating to the business" that is the solicitor's practice. The Playford letter is a document recording advice provided to a client. It records legal advice which is a matter related to the business of a solicitor's practice. The three threshold matters have been established.[10]
[22]
If by those comments Bampton J intended to convey as a general proposition that if a document is a genuine document that has been prepared or used in the ordinary course of business, then it necessarily satisfies the 'purpose' element of the definition, then the observation may go too far. I doubt, however, that this is what her Honour intended. Be that as it may, it is tolerably clear that in adopting a liberal approach to the statutory provision, Bampton J rejected the sort of narrow construction advanced by the defendant in this matter. Bampton J, correctly in my respectful view, did not limit the 'purpose' element of the definition to the recording of the performance of a business function.
For the reasons I have explained, including the purposes identified at [39] above, I consider that the Information Memoranda were prepared by the relevant real estate agent company for purposes that included the substantive purpose of recording matters relating to the business of that company. It follows in my view that each of the relevant statements in the Information Memoranda is admissible as a business record under s 79C(2a).
I also consider that having regard to the relevant circumstances, it is reasonable to infer that the relevant statements were ultimately derived from financial and other records of the various hotels held by their owner and/or manager. For example, I infer that the management fee was ultimately derived from the relevant management agreement itself. The profit figures I infer were derived from the financial statements of the relevant business. The management agreements and the financial statements are plainly business records. It follows therefore that in addition to the relevant statements in the Information Memoranda being business records themselves, they directly or indirectly reproduce or are derived from, a business record. They are therefore admissible under s 79C(2a).
In addition to the Information Memoranda, the plaintiff seeks to tender, over the objection of the defendant, single page documents evidently produced by the same various agents that set out information relating to the actual sale of hotel properties. The single page document takes the form of the agent's branding with information set out regarding the sale contract and some analysis of the sale such as the dollar rate per square room, and the yield. The document also summarises aspects of the trading performance such as occupancy rate and a basic description of the property and the management agreement. The defendant objected to the characterisation of these documents as 'business records' under s 79B of the Evidence Act, again on the basis that the purpose for the preparation of the document was advertising rather than for the purpose of recording matters relating to the business. The defendant submitted that although the property had already sold, the purpose of the document was to promote the real estate agent company that had achieved the sale.
Where such a document was returned on subpoena by the real estate agent company or the hotel owner, I infer that it is a genuine business record produced by the real estate agent company in the ordinary course of its business. It may well be that one of the purposes of the document was to promote the real estate agent company. However, I would also infer in the circumstances that a substantive purpose of the document was to record details of the property and the sale for use by the real estate agent company in the ordinary course of its business. It follows from that, and for the reasons I have set out above that such a document is admissible as a business record under s 79C(2a).
For the reasons set out above, I have concluded that the statements in the documents meeting the descriptions I have set out above, are admissible under s79C of the Evidence Act.
[23]
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
[24]
[1] Collopy v Commonwealth Bank of Australia [2019] WASCA 97 [69]; Donohoe v The Director of Public Prosecutions (WA) [2011] WASCA 239 [126].