Mr Davis' cross-examination
172 Mr Magee commenced his cross-examination of Mr Davis by inviting him to turn to his witness statement signed on 9 February 2000. He asked Mr Davis whether he had discussed with Mr Crombie the evidence which Mr Crombie had already given in the proceedings. Mr Davis replied that he had not. Mr Magee challenged Mr Davis about a comment in his witness statement in which a particular exhibit had been identified as a true copy of a Deed for Administrative Services purportedly signed on 10 May 1996. Mr Davis acknowledged that he had erred in describing the Deed in those terms since the address of NFG contained in the Deed, Level 3, 608 St Kilda Road, Melbourne, had not, in fact, been occupied by NFG in 1996. It was not until 1999 that NFG had occupied premises in St Kilda Road. He agreed that although his signature appeared on the Deed, it could not have been a copy of the original, and must logically have been prepared some years after the event. He also agreed that the document purported to have been signed by Mr Crombie as an officer of NFG notwithstanding the fact that he was not a director of that company as at 10 May 1996.
173 On the following day, Mr Davis sought to explain the evidence which he had previously given regarding the execution of the Deed. He said that the address of NFG, Level 3, 608 St Kilda Road, Melbourne had, in fact, been the address of his former solicitors who had permitted him, at that time, to use that address as a registered office for the company. He had forgotten that fact the previous day.
174 Mr Davis conceded that although the Deed bore the date 10 May 1996 it had not been executed on that date. He said that he did not know who gave instructions for the Deed to be dated 10 May 1996 and he could not recall the circumstances under which it came to be executed. However, he knew that it must have been executed long after that date because there was no arrangement of any kind between NFG and Hemisphere at 10 May. He was pressed about this matter but could provide no explanation as to how, or why, the Deed had been backdated. He insisted that the arrangements between NFG and Hemisphere were not finalised until about mid June 1996, and that the terms of these arrangements were later embodied in the Deed.
175 Mr Davis was then cross-examined about various paragraphs in his witness statement. He accepted, after prompting, that a number of the statements contained in that document were not entirely accurate. He was asked why he had signed the witness statement as true and correct. He replied that he had signed the statement "hurriedly".
176 The circumstances surrounding Mr Davis' alteration to his witness statement to substitute for the expression "Crombie said that he had decided to leave Capital, and look elsewhere for work", the expression "Crombie said that he had resigned from Capital, and lookedelsewhere for work" were, not surprisingly, the subject of extensive cross-examination. Because of the relevance of this cross-examination to Mr Davis' credit I propose to set out in some detail a number of passages from it.
"MR MAGEE: Mr Davis, could you look please at paragraph 49 of your witness statement, which is the one you amended?---Yes.
Have you spoken to Mr Crombie about any evidence given by either Mr Park or himself since these proceeding began?---No.
…
I think you said in your evidence yesterday that you realised you wanted to change paragraph 49 about a week ago. Is that correct?---Yes, that's when I read it.
Was that the second or third reading of your witness statement that made you reach that conclusion?---It would be the last reading, yes.
When the witness statement was originally drawn, paragraph 49 reflected accurately the instructions that you gave at that time, didn't it?---I believe I told my counsel, when instructing him about this statement, that I had used the words "resigned".
Well, let me ask you again. When this witness statement was drawn and you read it, it accurately reflected the instructions you had given your counsel, didn't it?---By the reading I had given, perhaps it had, but obviously not on later readings.
When drafted and signed by you originally, this witness statement reflected what you told your counsel?---In general terms, yes. It wasn't ---
In specific terms in paragraph 48, 49, you said, "Crombie said to me that he had decided to leave Capital and look elsewhere for work." Now, you gave those instructions, didn't you, that, "What Mr Crombie told me was---"
…
MR MAGEE: The statement, "Crombie said to me that he had decided to leave Capital and look elsewhere for work," reflected accurately the instructions that you had given to the draftsperson of this witness statement, didn't it?---No.
You're saying they got it wrong - do you? Your barristers got it wrong?
HIS HONOUR: Well, the person who drew the witness statement.
MR MAGEE: Who drew the witness statement?---My barrister, my counsel.
Which one - or both? --- I don't know if it was both or - I'm sorry. I gave instructions originally to one.
Please answer my question. Was it Mr Herskope, was it Mr Evans or both?
HIS HONOUR: Or don't you know? --- I don't know who physically drew it.
MR MAGEE: Who did you give the instructions to, that, "Mr Crombie said he had decided to leave Capital and look elsewhere for work"? --- I don't know that that's what I said but the main instruction was given to Mr Evans.
Do you say that Mr Evans made that up, do you? ---I don't say he made it up. This is not word for word. There were many words spoken. I didn't draw the statement up. I didn't type it up. I didn't put it into terminology. I was asked to explain in a broad sense what happened, what were the circumstances of this matter, which I did. Now, I can't say that I spoke every single word that's in this statement. Obviously one has to be more careful. In a general sense, in a global sense, this is what happened. It's a truthful account of what happened. But whether every single word was the word I spoke, I can't say. I didn't draw it up. But I said a lot of things - voluminous amounts.
Have you finished your answer, Mr Davis? --- Sorry, yes.
Mr Davis, I will not ask you about precise words because sometimes you can't recall precise words. I'll ask you about the substance of the words. In substance then, the statement, "Crombie said to me that he had decided to leave Capital and look elsewhere for work" ‑ those words in substance reflects the instructions that you had given your counsel? --- No. What I said ‑ that he had resigned from Capital and was looking for work elsewhere.
And you didn't pick this up until about the third reading? --- No, I didn't. I had a lot on my plate. I've got a lot of other things ---
Yes, well, we're not concerned about those? --- No, I know.
You understood at all times, didn't you, the difference between a decision to leave Capital and a resignation? --- I was clearly of the opinion ‑ of the understanding ‑ that he was leaving Capital, he had resigned from Capital, he was going, clearly.
So can you say now that you can actually recall what Mr Crombie said? Can you recall the actual words he said? --- Yes, I can recall the words he said.
Not the substance now; you can remember the exact words?--- I'm not surprised at anything you've told me and I think you should know that I've resigned from Capital and if there is any work that you know of or anything I could do, I would be interested."
I see. So that has been fixed in your mind all the time ‑ a clear recollection of that since the conversation occurred? ---I haven't thought about it a lot.
You have a clear recollection of those actual words, you tell us, and you must have had that since the conversation occurred? --- Yes. "I'm not surprised at what you've told me. I've resigned from Capital and I'm looking for work and if there's anything you know of, would you please let me know."
But you didn't pick those precise words up when you looked at the paragraph 49. You didn't say, "Look, that doesn't ‑ I remember the precise words." You didn't say that, did you? --- No, it didn't ignite in my mind - I probably read through it ‑ that "I decided to leave" or "I've resigned" is a huge issue, as I read through this.
That's the fact, isn't it, that you didn't think resignation was a big issue at that stage. You didn't understand the significance, did you, of the date of resignation when you swore this witness statement, did you? --- I've never thought about it. To me -
You - I'm sorry, I interrupted? --- I beg your pardon.
I think we're both begging each other's pardon. I'll perhaps start again.
HIS HONOUR: Do you want to say something further in answer to that question, Mr Davis, or had you completed your answer? --- I think I was completed, your Honour.
MR MAGEE: Mr Davis, do you say that ‑ first of all, you agree with me, do you, that you read paragraph 49 and you signed it ‑ you've told us that ‑ and on at least one other occasion and you thought it accorded with your instructions on both those occasions? --- I signed it as being a reasonable summary of what I had said to my barrister, without going into the detail of every word, every comma, every full stop.
The reasonable summary you saw, the words that conveyed the reasonable summary to you, said nothing about resignation, did it? --- Not here, no. "Leaving" was resignation, in my mind, so yes.
I'm sorry, "leaving" was resignation? --- It was crystal clear he had resigned.
Just answer my question. Do you say "leaving" was resignation or ---? Obviously as I read this, yes.
Did you just say that, "Leaving was resignation, in my mind"? --- In reference to reading this, to your last question.
So if a person had said they were leaving you would have taken that as meaning, "I was resigning" or "I had resigned"? --- No, he did tell me he had resigned.
Why did you say, "Leaving and resignation are the same thing in my mind"? --- It was in answer to your previous question.
No, it wasn't, Mr Davis. It was a comment that you made and the transcript will bear that out. Why did you say that? --- Because I was thinking about your previous question.
Does "leaving" and "resignation" mean the same thing, in your mind? --- No, it doesn't when you consider it carefully.
When you read paragraph 49 on the two occasions did leaving, deciding to leave and resigning mean the same thing in your mind? --- As I read through it, yes, because ‑ yes, as I read through it, it did.
If Mr Crombie had said to you, "I've decided to leave", you would have taken that as meaning, "I've decided to resign"? --- No, I wouldn't have.
You're quite sure of that? --- Quite sure of that.
177 Mr Davis agreed that he had arranged to meet Mr Healy within a couple of days of receiving Mr Crombie's initial call. He said that he was horrified to learn from Mr Healy that Sentinel was going to withdraw its investors from the Copperfield loan transaction. He saw that as a threat to Classic Trading's security. He said that the conversation with Mr Crombie regarding his "resignation" had occurred the next day, after his meeting with Mr Healy. He was aware, at that stage, that Mr Boyle had double pledged the loan book. He agreed that did not want CIC to know anything about Sentinel's clients' plans to pull out of the Copperfield investment. He also agreed that it had crossed his mind that if CIC discovered that Sentinel was planning to withdraw its investors, CIC or Mr Boyle "might do something" that would further affect Classic Trading's security.
178 Mr Davis insisted that when he met with Mr Healy he had no idea that Mr Crombie wanted to resign. The meeting had taken place the day before there had been any intimation of this by Mr Crombie. He was then asked the following questions:
"Mr Davis, if you didn't want CIC to find out and you thought Mr Crombie had not resigned, why did you phone Mr Crombie and tell him what Mr Healy had told you? ---Because he had told me - he was the person that told me that I should go and see Mr Healy, and I rang him back to tell him that the security was defective and in fact it had been double-pledged.
But, Mr Davis, you just told us that you wanted all this kept quiet from CIC. Mr Crombie was a director of CIC. Why were you telling a director the very thing you wanted to keep quiet from CIC? --- Because he was a director that had told me that my security could be in jeopardy and if he was me, he would be going to see Mr Healy.
So you thought that he was not going to pass the information on? You thought he'd keep it quiet, didn't you - the information you were giving him?---Yes.
You understood that he was not going to tell the company of which you then believed he was a director, the information you were giving him?---Look - - -
Look, you understood that he was not going to give the information you were giving to him, to the company of which he was a director, didn't you?---No. I felt I owed him a duty to tell him what Mac Healy had told me.
You said you didn't want CIC to know, yet you tell a director of CIC and you say you have no reason to believe at that stage he was going to resign. You were telling CIC, weren't you?---No, I was telling Frank Crombie.
That's right, because you knew Frank Crombie would not pass that information on, didn't you?---No, I didn't know what he would do. I thought he needed to be armed with the information."
179 Mr Magee then suggested to Mr Davis that his evidence concerning the outcome of his meeting with Mr Healy made no sense. To suggest to Sentinel that it switch its clients into the Asian book investment could only have diminished the security which Classic Trading had over the Copperfield loan book. He was then asked:
"When you told Mr Crombie about the meeting with Mr Healy, did you consider that you might be compromising his position as a director of CIC?---I never thought about it.
Did you think a director of CIC owed obligations to his company to pass the type of information you've given him onto the company?---It depends what sort of dishonest activities were going on in the company." (emphasis added)
180 Mr Davis agreed with Mr Magee that he had expected, throughout his negotiations with Sentinel, that NFG would receive a fee for managing the Hemisphere loan portfolio. He was then asked what he had thought Mr Crombie would do with the information which Mr Davis had conveyed to him concerning what Mr Healy had said. He replied:
"Whatever he wanted to, because he had alerted me to the problem. It was up to him."
181 Mr Davis immediately added that he had thought it likely that Mr Crombie would tell Mr Park what Mr Healy had said.
182 In answer to a question from me, Mr Davis said that when he had previously referred to "dishonest activities" within CIC he had been referring to Mr Park's failure to have kept him informed of various matters which Mr Davis considered he ought to have known about.
183 Mr Magee then asked Mr Davis again whether he had thought that Mr Crombie would tell Mr Park what Mr Healy had said. On this occasion, Mr Davis said that he had not considered that he would do so, but added that it would not have worried him if he had.
184 Mr Davis was asked when he knew for certain that the Copperfield investors were going to take up loans from Hemisphere. He said that by late June 1996 he was aware that they would do so. He was then asked why, having regard to that answer, NFG had opened a Hemisphere Management account on 28 May 1996, at least several weeks before it was known that it would be the loan manager. He explained that he might have been doing some other business with Mr Loftus. That explanation was challenged by Mr Magee who pointed out that Mr Crombie had been designated, on 28 May 1996, as general manager of NFG, and as a signatory to the account. In addition, the Notice of Authority referred to a resolution of a meeting of the directors of NFG having conferred authority upon Mr Crombie, as general manager, to operate the account. Mr Davis acknowledged that, in all likelihood, no such meeting had taken place. He also acknowledged that what was set out in the document of 28 May 1996 was plainly false. He went so far as to agree that the document must have been known to be false on the day that it was executed.
185 There was then extensive cross-examination of Mr Davis directed, in the main, towards impugning his credit. It is unnecessary for present purposes to summarise that cross-examination.