ASIC v Rich

5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS OBSERVATIONS (On postponement of arrangements for taking evidence in London) (Ex tempore; revised 11 October 2004) 1 HIS HONOUR: These observations relate to the alteration of plans for the taking of evidence on commission which was intended to be taken in London in December this year. When the hearing commenced on 6 September 2004, ASIC provided to the court a schedule of witnesses for cross-examination. It contemplated that the first two weeks of hearing time would be taken up with: · the tendering of the exhibits to Mr Carter's reports and affidavits; · the tendering of ASIC's tender bundle; · the reading of "provenance" affidavits to identify the source of the documents in ASIC's tender bundle and in the exhibits to Mr Carter's reports and affidavits; · the hearing of the evidence of section 167 request witnesses (Mr Long of Ernst & Young; possibly others from that firm; the liquidators; and Ms Reynolds of PricewaterhouseCoopers); 2 ASIC's schedule contemplated that once those matters, generally going to the admissibility of the Carter exhibits, the Carter reports and affidavits and the tender bundle documents, had been completed, the "substantive" evidence would commence. That was due to occur on 20 September with the commencement of the evidence of Mr Carter. 3 The schedule provided that thereafter evidence would be given by Ms Randall, Mr Boaden, Mr Howell-Davies, Mr Kleemann, Mr Packer and Mr Murdoch. It would be necessary for Mr Boaden and Mr Howell-Davies to travel from London to give evidence. According to the schedule, all of that evidence would be completed by no later than 2 December. Then the court would, in effect, be transported to London where I would take evidence on commission from Messrs Werner, Weston, Butcher and Segers over a period of up to two weeks ending on 16 December. 4 If the schedule were adhered to, ASIC's case would have been fully presented by 16 December. It is apparent from a section 167 notice given in respect of Ms Reynolds that the defendants wish to challenge the admissibility of Mr Carter's reports and affidavits and the exhibits to them and a large quantity of documents in ASIC's tender bundle. There will be challenges to this evidence on various fronts, including a challenge based on Mr Carter's lack of independence, and challenges having to do with the source of various documents. 5 It appears from the section 167 notice that the defendants have concerns with respect to the admissibility of documents obtained by ASIC from sources outside Australia and from legal representatives of PBL and CPH. At various times during the two months prior to the commencement of the hearing, the defendants issued subpoenas to PricewaterhouseCoopers and notices to produce to ASIC. Further notices to produce have been issued since the hearing commenced. The purposes of the subpoenas and notices to produce included investigating the role of PricewaterhouseCoopers and investigating the source of the documents in the Carter exhibits and the tender bundle. 6 After the commencement of the hearing, ASIC continued to answer notices to produce. What emerged during this process was that a substantial quantity of documents that had been sourced from the liquidators (by reference to the "Ferriers I-drive") were in fact originally obtained by ASIC pursuant to the execution by the Australian Federal Police of a search warrant at One.Tel's premises. Further documents were obtained through the execution by the Australian Federal Police of search warrants at the homes of officers of One.Tel, including the defendants. 7 Since that became evident, the defendants have sought to cross-examine witnesses and seek production of documents to obtain evidence as to precisely how the documents were obtained, how they came into the hands of ASIC, and what ASIC then did with them. 8 ASIC's opening, contentions with respect to notices to produce and subpoenas, the defendants' review of documents produced, and the reading of the provenance affidavits, occupied the court's time until 20 September. On that day, the court began to hear the oral evidence of three of the provenance witnesses, who had been required for cross-examination. Evidence was given by those witnesses over a period of five days and then by Ms Reynolds over a period of nine days, up to and including 8 October. 9 Consequently, by 8 October the hearing had not progressed sufficiently to begin hearing the evidence of the "substantive" witnesses. On 8 October, I reviewed progress with counsel, particularly having regard to the fact that the two overseas witnesses who were scheduled to come to Australia - Mr Boaden and Mr Howell-Davies - had already arrived and, according to ASIC's schedule, Mr Boaden's evidence should have commenced earlier that week. 10 It appeared to me then that there would be one or more days remaining in the oral evidence of the provenance witnesses. Then there was an issue as to whether, pursuant to a request under section 167, Ms Rees, the consultant solicitor who has had the carriage of the matter for ASIC, would give evidence. Moreover, it emerged that on 1 October 2004, the executive director of enforcement for ASIC, Ms Redfern, had sworn an affidavit going to the search warrant issue and the defendants had required her for cross-examination. 11 The court was, therefore, faced with the prospect that the process of hearing evidence on the matters of admissibility to which I have referred would be likely to last for an indefinite further period which might run into weeks rather than days. 12 We explored whether it would be possible to interpose the evidence of Mr Boaden and Mr Howell-Davies. Senior Counsel for the defendants informed the court that until the issues about admissibility of a substantial number of the documents under contention were resolved, the way in which he would cross-examine the two overseas witnesses was somewhat in the air. He informed the court that if the documents were ruled inadmissible, one course might be taken to the overall cross-examination, but if they were admissible, another course would be taken. He told the court that he had explored the possibility of having some "without prejudice" adducing of evidence, but because the cross-examination strategy would be affected in the way that I have indicated, it would not be feasible, in his view, for such an approach to be taken. 13 Further approaches were explored with a view to obtaining an acceptable method of hearing the evidence of Mr Boaden and Mr Howell-Davies forthwith, but I reached the conclusion that in view of what had been submitted by Senior Counsel for the defendants, none of those alternatives was really feasible. It consequently seemed to me necessary to proceed to resolve the admissibility issues with as much haste as the circumstances would allow before moving into the hearing of evidence of "substantive" witnesses. 14 I expressed the view that, given the need to hear the remaining evidence on admissibility and submissions of the parties (which would be substantial), it seemed unlikely that the admissibility issues would be resolved before the end of this month, at the earliest. No-one disagreed with that assessment. 15 That raised, then, the question of what to do about plans for take evidence on commission in London. It seems to me generally undesirable to embark on the evidence of the London witnesses until at least the fundamental financial part of ASIC's case, which includes the evidence of Mr Carter, in particular, has been presented. I could not be confident in the circumstances that if Mr Carter's reports and affidavits were held to be admissible, his oral cross-examination and other similar evidence would be completed before the end of November. 16 There was the possibility, as well, that Mr Boaden or Mr Howell-Davies might have some difficulty in returning to Australia at a later time, with the consequence that their evidence, or part of it, might have to be taken in London at the risk of expanding the amount of the court's time needed there. It would not be feasible for that expansion to occur so as to extend the court's London hearing over the Christmas period. 17 In all those circumstances, I have very reluctantly come to the conclusion that the appropriate course is to cancel the existing arrangements with respect to the taking of evidence on commission in London in December, on the basis that there is a likelihood (although a likelihood that may be affected by my decisions as to admissibility of evidence) that the taking of evidence on commission in London will have to take place in the new year. 18 ASIC has paid some money into court to cover the court's expenses. While it would be possible to leave that money with the court, it may be best, in the circumstances, for ASIC to make an application to have the money paid back to it. If ASIC wishes to do so, its solicitor should contact my chambers. **********

Last Modified: 10/20/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.