Austress v Marlin [2002] NSWSC 958 | Case summary

1 This is an appeal against a decision of Master McLaughlin dismissing an application for an order under s.459G of the Corporations Act 2001 (Cth) setting aside a statutory demand. 2 On 26 September 2002, I declined to allow the plaintiff to adduce certain further affidavit evidence: see Austress Freysinnet Pty Ltd v Marlin International Pty Ltd [2002] NSWSC 892. Mr Benson of counsel, who appeared for the defendant, then indicated that he did not intend to read affidavits that had been filed and served on behalf of the defendant. Mr Pesman of counsel, who appeared for the plaintiff, thereupon sought to tender certain parts of the defendant's affidavits, being paragraphs 1, 3, 9, 13, 16 and 17 of Mr Armitage's affidavit of 18 September 2002 and paragraphs 1, 2, 4 and 5 of Mr Christie's affidavit of 28 August 2002. Mr Benson objected to the tender on two bases: first, that the introduction of the evidence would be contrary to the principles which had produced the ruling of 26 September (that is, the principles arising from s.75A(8) of the Supreme Court Act 1970); and, second, that the material in question was protected by client legal privilege. 3 I must deal with those matters before proceeding to others, noting that counsel were content to leave matters on the basis that, if I decided that Mr Pesman should be permitted to tender the paragraphs in question, Mr Benson would read other paragraphs of the affidavits, being paragraphs 9, 10, 11 (except the first sentence), 12 and 14 (except the first sentence) of Mr Armitage's affidavit and paragraphs 6 and 9 of Mr Christie's affidavit. (Mr Pesman indicated that, in that eventuality, he would object to the second sentence of Mr Armitage's affidavit, but I ruled that it would be admitted). 4 As to the first objection, the position in relation to the evidence the plaintiff now wishes to adduce (said to be admissions by the defendant) differs from that which prevailed in relation to the material I excluded on 26 September. Exclusion on that occasion was by reference to s.75A(8) and the requirement for "special circumstances", a requirement which, on assessment by reference to principles emerging from Council of the City of Greater Wollongong v Cowan (1956) 93 CLR 435 and Akins v National Australia Bank Ltd (1994) 34 NSWLR 155 as applied in Wright v Australian Associated Motor Insurers Ltd (1999) NSWSC 208, I held not to be satisfied. This was because the evidence in question had been available to the plaintiff at all relevant times and it was to be presumed that it had either chosen not to bring it forward before the Master or had simply neglected to do so. 5 The evidence now in question was not available to the plaintiff when the proceedings were before the Master. That being so, I consider its introduction by the plaintiff at this stage not to be precluded by s.75A(8). 6 The second question is whether client legal privilege applies. The defendant's submission that it does proceeds on the basis that, unless and until it is read in court, an affidavit filed by a party retains the confidentiality which attaches to it by reason of its being a statement by a witness brought into existence for the purposes of legal proceedings. That principle was advanced by reference to the decisions in Abigroup Ltd v Akins (1997) 42 NSWLR 623 (and, on appeal, (1998) 43 NSWLR 539), Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation (1994) 48 FCR 337 and Australian Competition and Consumer Commission v Telstra Corporation Ltd (2000) 96 FCR 317. 7 It is important to note that all these cases - as well as others in the same line, such as State Bank of South Australia v Smoothdale (No 2) (1995) 53 FCR 125 - involved attempted use in one proceeding of an affidavit or witness statement filed and served in another. The decisions in most of the cases that client legal privilege applied to prevent resort to those materials were based on the premise that filing and service in the particular proceeding had in no sense entailed consent to use of the materials in other proceedings such as to waive the applicable privilege. As the Court of Appeal emphasized in Akins v Abigroup (above), principles of proper purpose underlying Home Office v Harman [1983] 1 AC 280 operate here. 8 I am satisfied that the principles in the cases to which I have referred do not apply where it is sought to use in particular proceedings affidavits or witness statements served by one's opponent in those same proceedings. The purpose of the communication, in a case such as that, is to inform the recipient of the evidence the serving party intends to lead. That communication cannot carry with it any form of restriction upon the use the recipient may make of the material, save that it must be used for the proper purposes of the particular proceedings. 9 In contending that he is entitled to tender the relevant parts of affidavits filed by his opponent, Mr Pesman relies on the following passage in the judgment of Brinsden J in Barristers' Board of Western Australia v Tranter Corporation Pty Ltd (1976) WAR 65: "Evidence may be led by either party by affidavit in support of its respective case. If evidence is so led by affidavit then the deponents must submit themselves to cross-examination by reason of an order having been made under O 36 r 2(3). Evidence is led by affidavit, not by merely filing the affidavit, but by reading it to the court. An affidavit which has been placed on the file does not become part of the proceedings until it is opened to the court (see Manson v Ponninghaus [1911] VLR 239). A party is entitled to read to the court an affidavit filed on behalf of another party (see Re Margetson and Jones ) [1897] 2 Ch 314). It is true that in proceedings in the Supreme Court it is often the practice that the affidavits are not formally read to the court, but even if this formality is not carried out, nevertheless the party should indicate upon what affidavits it relies. Mr Kennedy does not rely on the affidavit of Tranter or Michell as part of his case, but if he did so, the authorities seem to suggest that Mr Lee would be entitled to cross-examine these deponents, notwithstanding the fact that the affidavits have been filed on behalf of the defendant company (see Leaders Shoes (Aust) Pty Ltd v National Insurance Co of New Zealand Ltd [1968] 1 NSWR 344)." 10 The notion that, when one party has filed an affidavit in proceedings, either party may rely on it in those proceedings is also recognized in Leaders Shoes (Aust) Pty Ltd v National Insurance Co of New Zealand Ltd [1968] 1 NSWR 344 and In the Marriage of Crowe [1988] FLC 91-983; see also (1996) 70 ALJ 184. I refer also to the Practice Notice by Tony Mehigan at page 279 of (1986) 2 Australian Bar Review and, in particular, the following part of it: "Where a direction has been given that the trial of a proceeding is to be primarily by way of affidavit evidence, it is not appropriate to tender an affidavit or part of an affidavit sought to be relied upon as a documentary exhibit. The correct procedure is to read the affidavit, except where it is sworn by a party or by a person having authority to make admissions on a party's behalf. (As to vicarious admissions see British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160 and see Cross on Evidence , 2nd Australian edn at p 515.) Whether or not a direction is given that the trial proceed upon affidavit evidence, the tender of an affidavit or part of an affidavit is permissible where an admission by a party or a vicarious admission is relied on. The distinction between the documentary tender on the one hand and the reading of the affidavit on the other is important: where an affidavit is read, the deponent must be made available for cross-examination; there is no such requirement in the case of a documentary tender. Tactical considerations are thus brought into play." 11 In light of the above, it seems to me that client legal privilege should not be regarded as continuing to subsist in a filed affidavit in such a way as to preclude use of that affidavit by the opposing party in the proceedings in which it has been filed. 12 I turn now to the question whether the parts of the affidavits of Mr Armitage and Mr Christie Mr Pesman seeks to tender are capable of being seen as an admission by the defendant. In doing so, I remind myself of the question in issue. The statutory demand served by the defendant on the plaintiff claims payment by the plaintiff of $45,000 as: "Moneys payable for unpaid goods sold and delivered. Attached hereto and marked 'A' is the Creditor's invoice dated 15/5/98 - $45,000." 13 The attached invoice contains under the heading "Description" three items with a price ascribed to each: "Hydraulic sperry unit (complete) $26,000, compressor $1500, refinery equipment $17,500." 14 On the appeal, emphasis was given to the last of these, the "refinery equipment". The plaintiff contended that the refinery equipment had never been delivered to it and that the non-delivery constituted grounds for finding that there was a genuine dispute as to the existence or amount of the debt, to the extent of the $17,500 attributed to the refinery equipment. Submissions made by Mr Pesman stated that the balance of the $45,000 had been paid. 15 The decision of the Master was, in effect, that the evidence before him did not seriously call into question the fact of delivery of the refinery equipment. The plaintiff now seeks to rely on what it says is an admission of the defendant that there was no delivery. It does so by reference to the affidavit of Mr Armitage, a director of the defendant, sworn on 19 September 2002. The capacity of a director to make an admission binding on his company may be accepted. But the means by which Mr Armitage is said to make the admission is the statement in paragraph 16 of his affidavit, coupled with the affidavit of Mr Christie. Mr Armitage's paragraph 16 reads as follows: "In respect of paragraph 14 of the affidavit of Mr Kowalski, I refer to this my affidavit and to the affidavit of Fergus Christie as evidence of the delivery of the refinery equipment." 16 Mr Christie is the manager of a firm called Solvent Services. The relevant parts of Mr Christie's affidavit state that items of the same description as the "refinery equipment" as set out in the invoice attached to the statutory demand were delivered by Mr Armitage to the premises of Solvent Services "in or about 1996/1997". It is apparently some adoption or endorsement of this statement of Mr Christie by Mr Armitage that is said by the plaintiff to amount to an admission by the defendant that the refinery equipment was not delivered by the defendant to the plaintiff. 17 I do not accept that the material in question can or should be regarded as an admission by the defendant on the issue of delivery of the refinery equipment. If it can properly be said that Mr Armitage (and, through him, the defendant) has adopted the statement of Mr Christie as to delivery to the premises of Solvent Services in or about 1996/1997, the fact remains that Mr Armitage makes other statements inconsistent with Mr Christie's account. Specifically, he says at paragraph 3 of the affidavit which, in paragraph 16, refers to Mr Christie's affidavit, that delivery was made by the defendant to the plaintiff in May 1998. That explicit statement is inconsistent with any supposed admission that delivery was made to Solvent Services in or about 1996 or 1997. 18 I therefore do not consider it correct to proceed on the basis that there has been any admission by the defendant that, as the plaintiff contends, the refinery equipment was not delivered by the defendant to the plaintiff. It follows that, even with the additional material that Mr Pesman seeks to tender, the evidence before me would remain in a state warranting the result arrived at by the Master, namely, that the fact of delivery of the refinery equipment has not seriously been called in question so as to give rise to a genuine dispute as to the existence or amount of the debt, to the extent of the sum of $17,500 for refinery equipment. 19 The appeal is therefore dismissed with costs. **********

Austress v Marlin

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