Australian Securities and Investments Commission v Fortescue Metals

RULING AS TO ADMISSIBILITY OF STATEMENTS UNDER SECTION 19 OF THE ASIC ACT 1 ASIC seeks to tender parts of statements of the second defendant, and of Mr Graeme Rowley and Mr Alan Watling, officers of the first defendant at all material times, made upon their respective examinations under s 19 of the Australian Securities and Investment Commission Act 2001 (Cth) (the ASIC Act). The relevant statements are contained in transcript extracts. 2 The transcripts of Rowley and Watling are sought to be tendered under ss 81 and 87 of the Evidence Act 1995 (Cth) as evidence of admissions made on behalf of the first defendant. Admissions made in the examination of a corporate officer may be used as evidence against the corporation: ACCC v Leahy Petroleum [2004] FCA 1678 at [118]-[124]. 3 The transcript of the second defendant is proffered as evidence of an admission against interest as well as an admission made on behalf of the first defendant. ASIC relies for this proposed tender upon ss 81 and 88 of the Evidence Act alternatively s 76 of the ASIC Act. 4 I have been asked to assume for the purposes of this ruling as to admissibility of the transcripts that the statement recorded in each constitutes a relevant admission although it may be that this will be the subject of challenge in due course. 5 Section 19 of the ASIC Act provides as follows: 19 Notice requiring appearance for examination (1) This section applies where ASIC, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1. (2) ASIC may, by written notice in the prescribed form given to the person, require the person: (a) to give to ASIC all reasonable assistance in connection with the investigation; and (b) to appear before a specified member or staff member for examination on oath and to answer questions. (3) A notice given under subsection (2) must: (a) state the general nature of the matter referred to in subsection (1); and (b) set out the effect of subsection 23(1) and section 68. 6 Sections 76 to 79 are in Part 3, Div 9 of the ASIC Act and provide as follows: 76 Statements made at an examination: proceedings against examinee (1) A statement that a person makes at an examination of the person is admissible in evidence against the person in a proceeding unless: (a) because of subsection 68(3), the statement is not admissible in evidence against the person in the proceeding; or (b) the statement is not relevant to the proceeding and the person objects to the admission of evidence of the statement; or (c) the statement is qualified or explained by some other statement made at the examination, evidence of the other statement is not tendered in the proceeding and the person objects to the admission of evidence of the first-mentioned statement; or (d) the statement discloses matter in respect of which the person could claim legal professional privilege in the proceeding if this subsection did not apply in relation to the statement, and the person objects to the admission of evidence of the statement. (2) Subsection (1) applies in relation to a proceeding against a person even if it is heard together with a proceeding against another person. (3) Where a written record of an examination of a person is signed by the person under subsection 24(2) or authenticated in any other prescribed manner, the record is, in a proceeding, prima facieevidence of the statements it records, but nothing in this Part limits or affects the admissibility in the proceeding of other evidence of statements made at the examination. 77 Statements made at an examination: other proceedings Where direct evidence by a person (the absent witness) of a matter would be admissible in a proceeding, a statement that the absent witness made at an examination of the absent witness and that tends to establish that matter is admissible in the proceeding as evidence of that matter: (a) if it appears to the court or tribunal that: (i) the absent witness is dead or is unfit, because of physical or mental incapacity, to attend as a witness; or (ii) the absent witness is outside the State or Territory in which the proceeding is being heard and it is not reasonably practicable to secure his or her attendance; or (iii) all reasonable steps have been taken to find the absent witness but he or she cannot be found; or (b) if it does not so appear to the court or tribunal - unless another party to the proceeding requires the party tendering evidence of the statement to call the absent witness as a witness in the proceeding and the tendering party does not so call the absent witness. 78 Weight of evidence admitted under section 77 (1) This section applies where evidence of a statement made by a person at an examination of the person is admitted under section 77 in a proceeding. (2) In deciding how much weight (if any) to give to the statement as evidence of a matter, regard is to be had to: (a) how long after the matters to which it related the statement was made; and (b) any reason the person may have had for concealing or misrepresenting a material matter; and (c) any other circumstances from which it is reasonable to draw an inference about how accurate the statement is. (3) If the person is not called as a witness in the proceeding: (a) evidence that would, if the person had been so called, have been admissible in the proceeding for the purpose of destroying or supporting his or her credibility is so admissible; and (b) evidence is admissible to show that the statement is inconsistent with another statement that the person has made at any time. (4) However, evidence of a matter is not admissible under this section if, had the person been called as a witness in the proceeding and denied the matter in cross-examination, evidence of the matter would not have been admissible if adduced by the cross-examining party. 79 Objection to admission of statements made at examination (1) A party (the adducing party) to a proceeding may, not less than 14 days before the first day of the hearing of the proceeding, give to another party to the proceeding written notice that the adducing party: (a) will apply to have admitted in evidence in the proceeding specified statements made at an examination; and (b) for that purpose, will apply to have evidence of those statements admitted in the proceeding. (2) A notice under subsection (1) must set out, or be accompanied by writing that sets out, the specified statements. (3) Within 14 days after a notice is given under subsection (1), the other party may give to the adducing party a written notice: (a) stating that the other party objects to specified statements being admitted in evidence in the proceeding; and (b) specifies, in relation to each of those statements, the grounds of objection. (4) The period prescribed by subsection (3) may be extended by the court or tribunal or by agreement between the parties concerned. (5) On receiving a notice given under subsection (3), the adducing party must give to the court or tribunal a copy of: (a) the notice under subsection (1) and any writing that subsection (2) required to accompany that notice; and (b) the notice under subsection (3). (6) Where subsection (5) is complied with, the court or tribunal may either: (a) determine the objections as a preliminary point before the hearing of the proceeding begins; or (b) defer determination of the objections until the hearing. (7) Where a notice has been given in accordance with subsections (1) and (2), the other party is not entitled to object at the hearing of the proceeding to a statement specified in the notice being admitted in evidence in the proceeding, unless: (a) the other party has, in accordance with subsection (3), objected to the statement being so admitted; or (b) the court or tribunal gives the other party leave to object to the statement being so admitted. 7 The defendants submit that the provisions of ss 76-79 of the ASIC Act should be treated by the Court as relevantly the exclusive procedure governing the manner of admission of statements made at an examination, in circumstances like these. They submit that to permit reliance upon the provisions of the Evidence Act would render nugatory the specific regime governing admissibility of such statements that is set out in the ASIC Act, when ASIC has compulsorily examined people without according them sufficient procedural fairness as would occur in Court proceedings. That they say is one reason why s 77(b) of the ASIC Act provides as it does. 8 Section 83 of the ASIC Act provides that nothing Division 9 renders evidence inadmissible in a proceeding in circumstances where it would have been admissible in that proceeding if Division 9 had not been enacted. 9 The defendants submit that, upon its proper construction, s 83 of the ASIC Act provides that if some other law makes evidence of s 19 transcripts admissible,ss 76-83 of the ASIC Act do not affect that position. However they submit that ss 81 and 87 of the Evidence Act do not provide that admissions contained in the s 19 transcripts are admissible, but only provide that the hearsay rule and the opinion rule do not apply to evidence of admissions; or s 87(1) deems the previous representations of an employee as the representation of the employer if the criteria in s 87 are met. 10 The defendants' complaint is not that the s 19 transcripts should not be admitted because they contain hearsay and opinion but rather that the s 19 transcripts cannot be admitted unless ASIC complies with s 77(b) of the ASIC Act by calling the witness who gave information to ASIC under s 19 of the ASIC Act under compulsion. They submit that compliance with s 77 of the ASIC Act is a pre-condition to admissibility of the s 19 transcripts. 11 I do not accept the defendants' submissions. In my opinion the provisions of ss 76 and 77 when read together with s 83 provides a means for the admission of statements made at a s 19 examination but does not affect the admissibility otherwise whether under the general law or statute of such statements. Such a view has some support in the cases: ASIC v Elm Financial Services Pty Ltd [2004] NSWSC 306 at [12], Re Richstar Enterprises Pty Ltd; ASIC v Carey (No 3) (2006) 57 ACSR 307; [2006] FCA 433 at [35]-[36]. Sections 76 and 77 will often afford the only means for the admission of such statements but this will not always be the case. 12 Section 81 of the Evidence Act relevantly provides that the hearsay rule does not apply to evidence of an admission. The evidence here was given orally at s 19 examinations of the several individuals. That evidence in each case in captured in a document which is the transcript of the evidence of each of the examinees. Section 82(b) is the means by which the exception under s 81 is maintained where the admission is contained in a document. I will return to s 82(b) later in these reasons. 13 Section 83 of the ASIC Act is directed to evidence. The evidence is the statement made by each of the examinees at their respective s 19 examinations. A statement, by s 5, in relation to an examination includes a question asked, an answer given and any other comment or remark made, at the examination. Such evidence may be contained in a written record (such as a typed transcript) signed by the examinee under sub-s 24(2) or authenticated in any other prescribed manner. Where there is a written record it becomes prima facie evidence of the statement it records: s 76(3). The statement may be proved otherwise. 14 Accordingly, it is not to the point that the statements in each case are recorded in writing in a typed transcript. 15 Moreover, in my opinion, ss 76 and 77 are each discrete provisions governing different circumstances. 16 Section 76 concerns the admissibility of a statement made by a person in a proceeding "against that person", that is to say a proceeding to which that person is a party. This section concerns the tender of the statement by the second defendant to these present proceedings brought against him. 17 Section 77 concerns the admissibility of a statement made by a person who is not a party and who is not called as a witness. Indeed s 77 describes such a person as "the absent witness". The conditions for the tender of such a statement set out under s 77(a) and (b) apply only to the admission of such a statement. They do not apply to a tender of a statement based in s 76 which has its own set of exclusionary provisions under s 76(a)-(d). 18 This conclusion is reinforced by consideration of the legislative history of ss 76 and 77. 19 The original forerunners to these sections were ss 299 and 300 of the Companies Act 1981, where these provisions were first introduced. The Explanatory Memorandum for the Companies Bill 1981 stated at cl 731, in reference to cls 299 to 303: There are new provisions designed to allow evidence given in an examination to be admissible in any court proceedings against the person examined or other persons. 20 Clause 732 of the Explanatory Memorandum dealt with s 299 (the forerunner to s 76) and stated: The record of examination is generally admissible as evidence against the person examined in any civil or criminal proceedings. 21 Clause 735 of the Explanatory Memorandum dealt with s 300 (the forerunner to s 77) and stated: Questions and answers at an examination will be admissible in any proceedings against other persons. However, such evidence will not be admissible if the party seeking to admit the evidence fails to call the person examined as a witness when asked to do so by the opposing party, or it is unreasonable, impractical or impossible to call the person as a witness. 22 These provisions were then removed into the Australian Securities Commission Act 1989 (ss 76 and 77). The Explanatory Memorandum for the Australian Securities Commission Bill 1988 states that the relevant clauses were "based" on ss 299 and 300 of the Companies Act 1981. The current ss 76 and 77 of the ASIC Act are substantially the same as the earlier provisions in the 1989 Act. 23 Section 78 is tied to the provisions of s 77 and concerns how much weight, if any, is to be given to the statement of an absent witness admitted into evidence. 24 Section 79 provides the machinery to enable a party to a proceeding to secure the pre-trial resolution of objections to the proposed tender of statements made at an examination whether the tender is pursuant to s 76 or s 77. It is, however, not a precondition to the tender of a statement under either of these provisions that there be compliance with s 79. It is merely a facultative provision. ASIC submits that in any event it complied with s 79. It is unnecessary given the view to which I have come to consider the question of compliance.

26 They submit that the provisions of ss 76 to 79 of the ASIC Act enable ASIC to tender evidence obtained under s 19 but provide the safeguard that the person against whom it is tendered can cross examine the examinee with the protection of Court procedures and the rules of evidence. 27 The second defendant contends that if ASIC's application under the Evidence Act were allowed, then the second defendant, if he wished to explain or qualify his evidence in the s 19 examination, would be obliged to give evidence in the proceeding and he would then be exposed to general cross examination by ASIC in circumstances where he did not have the protection of the privilege against self-incrimination. This, he says, would be very unfair. 28 The effect of ASIC's application, if allowed, the defendants say, is that ASIC can tender evidence in its case without there being any opportunity to challenge that evidence in the ASIC case. They contend that it is rather like asking for the right to tender a witness statement while asserting the opposing party cannot cross examine the maker of the statement. 29 I do not agree. Should the statements transpire not to constitute admissions they are inadmissible. If the statements of Rowley and Watling are admitted, the first defendant, if it wishes, may call those witnesses to explain them or to put them in a context which may affect their meaning. The second defendant has so far elected not to give evidence. If he wanted to challenge or explain the content of the statement ASIC seeks to tender it is also open to him to do so. Specific grounds of objection to the tender are set out under s 76 of the ASIC Act. He might, for example, have availed himself of the objection available under s 76(a) on the ground that the statement is not admissible because of sub-s 68(3). However, that provision concerns the protection against self incrimination available where a person complies with the provisions of s 68(2). The second defendant did not claim this privilege at his s 19 examination. The denial of fairness complained of is the result of the second defendant's own election during his examination. He may yet rely upon s 76(1)(c). Senior counsel for the second defendant foreshadowed that other parts of the statement may qualify the statements sought to be relied upon by ASIC but expressed a concern that this would enable ASIC to cross-examine his client. ASIC made no submissions on this point but I do not apprehend that s 76(1)(c) has that effect. If there is in fact some qualifying statement and ASIC declines to tender it then upon objection by the second respondent the statement tendered by ASIC will not be received in evidence. I will however leave this question open, for the present. 30 In relation to the statements of Rowley and Watling, I am satisfied, for the purposes of s 87(1)(a) and (b), given their respective positions as officers of the first defendant, that each had authority to make their respective statement on behalf of the first defendant alternatively that each was an employee of the first defendant and the statements in each case related to matters within the scope of the employment or authority of each of them. However, further consideration of the form in which the statements are tendered raises a doubt about whether the statements are admissible under s 81. 31 In tendering the s 19 transcript relating to Mr Forrest's examination, ASIC relies on ss 81 and 88 of the Evidence Act and s 76 of the ASIC Act. 32 The s 19 transcript of Mr Forrest's examination purportedly contains admissions made by Mr Forrest in the examination. But Mr Forrest is not the author of the document recording his alleged admissions. The transcript records representations made by the transcriber of the tape recording of the examination in relation to statements made by Mr Forrest at the examination. Therefore, s 82(b) prevents ASIC from relying on s 81 as a basis for the tender of the transcript. 33 Having regard to s 76(3) of the ASIC Act, it appears that the written record of Mr Forrest's examination has not been signed by him under section 24(2). Nor, so far as I am aware, has it been authenticated in any other prescribed manner to date. The written record therefore is not prima facie evidence of the statements it records. 34 In relation to the tender of the examination transcripts of Messrs. Rowley and Watling, persons who are not parties to this proceeding, ASIC relies on s 81 once again, and also s 87 of the Evidence Act (there is correctly no reliance on s 76 of the ASIC Act). 35 Once again these transcripts are caught, in my view, by s 82(b) of the Evidence Act. The transcripts of the examinations of Rowley and Watling record representations made by the transcriber of the tape recordings of the examinations in relation to statements made by the examinees. 36 The status of statements made by Messrs Forrest, Rowley and Watling at their examinations as recorded on the tape recordings of those examinations should be considered in light of the Evidence Act definitions of "document", "admission" and "representation" and "representation contained in a document". 37 In Part 1 of the Dictionary of the Evidence Act, "document" is defined as follows: document means any record of information, and includes: (a) anything on which there is writing; or (b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; or (c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else; or (d) a map, plan, drawing or photograph. 38 In Part 1 of the Dictionary, "admission" is defined as follows. admission means a previous representation that is: (a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding); and (b) adverse to the person's interest in the outcome of the proceeding. 39 It can be seen that an admission is a previous representation. In Part 1, "representation" is defined as follows. representation includes: (a) an express or implied representation (whether oral or in writing); or (b) a representation to be inferred from conduct; or (c) a representation not intended by its maker to be communicated to or seen by another person; or (d) a representation that for any reason is not communicated. 40 Part 2 of the Dictionary to the Evidence Act is headed "Other Expressions". This Part in clause 6 includes a definition of a representation contained in a document. Clause 6 states: For the purposes of this Act, a representation contained in a document is taken to have been made by a person if: (a) the document was written, made or otherwise produced by the person; (b) the representation was recognised by the person as his or her representation by signing, initialling or otherwise marking the document. 41 The tapes containing the aural recording of the examinations of Forrest, Rowley and Watling fall within para (c) of the definition of "document". Each recording can potentially constitute "a document in which the admission is made" for the purposes of s 82(b) of the Evidence Act. 42 In so far as ASIC seeks to tender admissions made in the examinations, it is open to it to rely on the representations made by the FMG executives on the tape recordings as constituting the relevant admissions. 43 In light of the above conclusions, I propose to deal with ASIC's request for the tender of the examination transcripts as follows. If Mr Forrest is satisfied that the transcript of his examination as proffered by ASIC is accurate, then that transcript may be tendered. If Mr Forrest is not satisfied of the accuracy of the transcript, then ASIC can seek to prove any relevant admissions by tendering the tape recording along with proof that Mr Forrest is the person speaking on the tape. 44 The transcripts of Rowley and Watling appear to have been signed by them. The signed transcripts may be taken to contain representations made by them pursuant to cl 6(b) of Part 2 of the Dictionary. Upon proof of the authenticity of their signatures and on my satisfaction that the transcripts contain relevant admissions, the transcripts are admissible. 45 The defendants say that even if otherwise admissible I should exercise my discretion available under ss 135-136 of the Evidence Act to decline to admit the statements or at least to limit the use to be made of them because of the danger, in each case, that the evidence or the particular use of the evidence might be unfairly prejudicial to each of them.

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Judgment (15 paragraphs)

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