Citibank Ltd v Liu; ABN Amro Bank NV v Liu

Supreme Court of NSW|2003-02-13|Before: Hamilton J

CITATION : Citibank Ltd v Liu; ABN Amro Bank NV v Liu [2003] NSWSC 69 HEARING DATE(S) : 13 February 2003 JUDGMENT DATE : 20 February 2003 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Statements in documents rejected.

CATCHWORDS : EVIDENCE [118] - Documentary evidence - Statutory provisions as to statements in documents when direct oral evidence admissible - Where maker of statement not attending as witness - Evidence Act 1995 s 64 - Whether to call maker of statement would cause undue expense or undue delay or is not reasonably practicable. LEGISLATION CITED : Evidence Act 1995 ss 62 & 64 CASES CITED : Caterpillar Inc v John Deere Limited (No 2) [2000] FCA 1903 De Rose v The State of S A (No 4) [2001] FCA 1616 4660/99 Citibank Limited (P) Chiu Wah Liu (aka Tina Liu) (D1) Casey Wong (aka Kai Chee Wong) (D2) Tatepro (Aust) Exports Pty Limited (D3) Premier Corporation Pty Limited (D4) PARTIES : Strategic Commodities Pty Limited (D5) 4662/99 ABN Amro Bank NV (P) Chiu Wah Liu (aka Tina Liu) (D1) Casey Wong (aka Kai Chee Wong) (D2) Tatepro (Aust) Exports Pty Limited (D3) Premier Corporation Pty Limited (D4) Strategic Commodities Pty Limited (D5) FILE NUMBER(S) : SC 4660/99; 4662/99 M A Pembroke SC and T M Faulkner (Ps) COUNSEL : S L Bell (D2) No other appearances Mallesons Stephen Jaques (Ps) SOLICITORS : Ian B Mitchell (D2) No other appearances

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4660/99 CITIBANK LIMITED v CHIU WAH LIU (aka Tina Liu), CASEY WONG (aka Kai Chee Wong) & ORS 4662/99 ABN AMRO BANK NV v CHIU WAH LIU (aka Tina Liu), CASEY WONG (aka Kai Chee Wong) & ORS JUDGMENT 1 HIS HONOUR: I am trying two sets of proceedings in which two international banks are seeking to recover some $US60 million paid by them as drawdowns on finance facilities in respect of international trade transactions. The drawdowns were in each case requested by a Sydney company, Pacific Asia Merchandise International Pty Limited ("PAM"). PAM is in liquidation. The controller of PAM was the first defendant, Tina Liu, who is a bankrupt in Australia, but is not physically present in this country. The proceedings have not continued against her. The proceedings have been tried as against the second defendant, Casey Wong ("the defendant"), who was described as the general manager of PAM, although there is an open issue in the proceedings as to what that position entailed. As I have said, the drawdown notices were issued by PAM. They required two signatories and in each case the defendant was one of the signatories. It is alleged that the 62 trade transactions encompassed in the 59 drawdown notices were all bogus. That is, it is alleged that all of the bills of lading and invoices which supported the transactions were fabrications and that no such transactions existed. The case is made somewhat poignant by the fact that the evidence indicates that the defendant is in the late stages of terminal liver cancer; he proved too weak to travel to Singapore in January for what was anticipated to be his last visit to his mother (with the aid of a passport restored to him for that purpose, being otherwise held by the Court under orders made by way of Mareva relief). 2 This judgment deals with the tender of evidence by the plaintiffs. That evidence consists of seven letters from organisations which appear to be purchasers under various of the impugned transactions and one affidavit sworn by the finance director of such a purchaser. The affidavit, however, at least at the moment, is not sought to be read, but is tendered as evidence of out of court representations by the deponent, in the same way as the seven letters are tendered. The tender is made pursuant to s 64 of the Evidence Act 1995 ("the EA"). Section 59 of the EA enacts the hearsay rule in the form of providing that evidence "of a previous representation made by a person is not admissible to prove the existence of a fact that the person intended to assert by the representation". The EA goes on in Part 3.2 and also Part 3.4 to provide specified exceptions to that rule. But even when previous representations fall within those exceptions, the admissibility of those previous representations is limited by s 62 which provides: "62 Restriction to 'first-hand' hearsay

(1) A reference in this Division (other than in subsection (2)) to a previous representation is a reference to a previous representation that was made by a person who had personal knowledge of an asserted fact.

(2) A person has personal knowledge of the asserted fact if his or her knowledge of the fact was, or might reasonably be supposed to have been, based on something that the person saw, heard or otherwise perceived, other than a previous representation made by another person about the fact."

The exception under which these documents are tendered is that provided for in s 64 which, so far as material, provides as follows: "64(1) This section applies in a civil proceeding if a person who made a previous representation is available to give evidence about an asserted fact.

(2) The hearsay rule does not apply to: (a) evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made, or (b) a document so far as it contains the representation, or another representation to which it is reasonably necessary to refer in order to understand the representation, if it would cause undue expense or undue delay, or would not be reasonably practicable, to call the person who made the representation to give evidence." 3 The eight documents tendered, with supporting documents showing how they came to be created, are contained in a folder which has been marked for identification 6 in the proceedings. The documents vary greatly in quality. At one end of the spectrum, that from Quangdong Foodstuffs Import & Export (Group) Corporation ("Quangdong Foodstuffs") is signed only with the typewritten name of the company. The author is not identified by name or status and, equally, there is no indication as to who within Quangdong Foodstuffs has ascertained or provided the information conveyed by the letter. The letter simply denies receipt of the enclosed invoice or the goods from PAM and that an order was placed with PAM for the goods. At the other end of the scale, the affidavit by a gentleman who identifies himself as the Finance Director of Peace Mark (Holdings) Limited ("Peace Mark") deposes quite specifically that his duties include overseeing the accounting and finance functions of Peace Mark, the method by which records are kept in Peace Mark and that he, the deponent, has reviewed the records of Peace Mark and makes his statements of denial by reference to those records. 4 In some instances, including that affidavit, Mr Stuart Bell, of counsel for the defendant, has admitted that the document on its face can be taken to fulfil the requirements of s 62(2), in that the knowledge of the maker of the document "might reasonably be supposed to have been based on something that the person saw, heard or otherwise perceived other than a previous representation made by another person about the fact". Those instances are at pp 57, 80, 98 and 100 of mfi 6. In the case of the other documents, he has submitted that that requirement is not fulfilled. In those other cases I accept his submission, despite the submissions to the contrary of Mr Pembroke, of Senior Counsel for the plaintiffs. Mr Pembroke has emphasised that there does not need to be a finding that the relevant person did have the requisite knowledge, but only that he may be supposed to have had it. That is quite correct. But I do not think that that conclusion can be reached where it is at least equally possible (and there is no other indication on face of the material) that the person may have been given the information by somebody else. Thus, if the managing director of BHP Billiton were simply to state that the records of his company showed that the company did not enter into a transaction, one would not easily suppose that that gentleman had gone and looked in the records of the company rather than deputing an inferior to do so and to tell him what had been found. The evidence really shows nothing of the size and nature of any of these purchasers and, as I have said, in the most extreme cases, does not even identify or give the status of the person who conveyed the information. In those circumstances, in my view, it cannot be supposed that the writer's knowledge was based on something he saw, heard or otherwise perceived, other than a previous representation made by another person. 5 However, even in the cases where the admissibility of the documents is not excluded by the provisions of s 62, the plaintiffs, to have them admitted, must meet the tests laid down in s 64. In essence they must convince the Court that to call as a witness the author of the document "would cause undue expense or undue delay, or would not be reasonably practicable". A similar application was recently dealt with by O'Loughlin J in the Federal Court in De Rose v The State of S A (No 4) [2001] FCA 1616. In that case also the proponent of the documents relied on each of the three "gateways", that to call the relevant person would cause undue expense or undue delay or would not be reasonably practicable. In that case O'Loughlin J referred to the decision of Heerey J in Caterpillar Inc v John Deere Limited (No 2) [2000] FCA 1903 that the difficulties of bringing an international witness to Australia were not sufficient to enliven s 64. As to the three gateways, O'Loughlin J said: "11 But there is a second factor, one to which Heerey J alluded, at par [26] of Caterpillar and that is the question of relativity. Today is the sixtieth day of this trial. There are three parties, each of whom benefits from the presence of senior counsel and supporting junior counsel with instructing solicitors. In addition, until recently, consulting anthropologists have been almost daily present for the parties. It would not be an exaggeration to say that the costs that have been incurred by the parties in these proceedings are very, very substantial, such that the additional costs in bringing five or so further witnesses to the Court would almost pale to insignificance. So, either by using video facilities or by accepting my latter observation, I am not of the opinion that any question of any undue expense is involved.

13 As to undue delay, the mere fact that this is the sixtieth day of the trial is an answer in itself. If this was a one or a two-day trial and the witnesses were difficult to locate, or were living in remote locations or inclement weather had made transportation difficult, such matters might have been relevant matters, but none of them exist in this case. In the knowledge of such a long case, there can be no question of undue delay. Each of these witnesses, if the State had wished it, could have been the subject of ample arrangements made with an abundance of time to have them present their evidence.

15 There has been no evidence adduced by the State that would suggest that there are matters such as age, infirmity or remote location which would make it unreasonable to expect the presence of those persons. It could not be said that the material which they would wish to present in evidence was incontrovertible material, yet material of such slight significance as to not affect materially the outcome of the trial. "

Essentially, those formulations cover the situation in this case. 6 As to undue expense, the claim as I have said, is for $US60 million and very large amounts have already been spent by the plaintiffs on pursuing the litigation. The documents sought to be tendered date in some cases from 1999 and in others from 2001. They all emanate from China, in one case from Shenzhen, in some others from Guangzhou and in the majority from Hong Kong. The cost of flying the relevant witnesses from China and accommodating them in Sydney would not be considerable against the size of this claim and the costs already spent. But that, although the most expensive solution, was not the only solution. Evidence could have been taken on commission or video links arranged. If video links from mainland China are difficult or unavailable, the distances from Shenzhen and Guangzhou to Hong Kong, where nobody doubts that video links are available, are much less than their distance from Sydney. 7 Equally the litigation has been under way for some years and the trial has occupied nine days before me over four months. There can be no question of there being any undue delay occasioned by the witnesses being called. 8 As to reasonable practicability there is no evidence in respect of any of the prospective witnesses that that witness would be unwilling to come to Australia to give evidence, much less be unwilling to cooperate with his evidence being obtained in some way which would incommode the witness less. 9 Mr Pembroke has put to me that the concept of "undue" expense or "reasonable" practicability should be measured against the utility of the evidence being given in a fashion which would make the basis of the representations more specific and which would afford the opportunity of cross examination concerning the representations. He said that there is at least some other evidence in the cases of each transaction that it did not exist. He said that, in effect, cross examination would be useless, as it would not change the ultimate effect of the evidence in the proceedings. In relation to that submission, it must be said that these pieces of evidence all go to matters that are absolutely central to the proceedings. That the transactions were bogus is not in any case admitted on behalf of the defendant and a vigorous defence has been conducted, which challenges on grounds far from contemptible the conclusions both that the transactions were bogus and, insofar as it is necessary to particular causes of action, that the defendant was guilty of or party to fraud in respect of them. Even in respect of the cause of action under the Fair Trading Act, the existence or non existence of the transaction is vital to the necessary allegation that the conduct was misleading. In these circumstances I do not think it appropriate that the Court take the stance that cross examination must be pointless and devoid of any likely effective result so far as the defendant is concerned. 10 For the foregoing reasons, I am therefore not prepared to come to the conclusion that in any case to call as a witness the person who made the representation would cause undue expense or undue delay or would not be reasonably practicable. For those reasons I reject the tender of the documents contained in mfi 6. It is possible that certain of the documents may be admissible on tender by either the plaintiffs or the defendant to establish certain other matters relevant in the proceedings. However, the appropriate course is simply to reject them at this stage on the basis that either party may re-tender any of them on another basis if desired.

Last Modified: 02/27/2003 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.

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