De Costi Seafoods (Franchises) Pty Limited and Anor v Wachtenheim and Anor

II. Background 2In the proceedings Serge Wachtenheim and his company, Deist Safety Equipment Australia Pty Ltd ("Deist"), are the defendants and cross-claimants in proceedings commenced by De Costi Seafoods (Holdings) Pty Ltd ("Holdings") and De Costi Seafoods (Franchises) Pty Ltd ("Franchises") for monies owed. The primary claim was determined in favour of Holdings and Franchises in an earlier hearing. The cross-claim is principally a claim for damages for misleading conduct arising from oral misrepresentations although there are other claims asserting unconscionable conduct and breach of contract. 3The background facts in this matter appear from the judgment on the cross claim. In summary, in November 2004 Mr Wachtenheim purchased a seafood retail business and became a franchisee of Franchises. Mr Shnider, Mr Wachtenheim's brother-in-law, provided assistance to Mr Wachtenheim in the period before and after the purchase of the business. 4Mr Shnider made himself available to Mr Wachtenheim's legal advisers before and after proceedings were commenced against Mr Wachtenheim. Mr Shnider had several meetings with Mr Wachtenheim's solicitor and his counsel and engaged in lengthy e-mail correspondence, sometimes at weekends and in circumstances of urgency, answering questions asked of him. This process continued up to and perhaps beyond the time when Mr Wachtenheim and his legal representatives decided to join Mr Shnider to the proceedings as a cross-defendant, alleging misleading conduct by him. 5Mr Shnider was joined as the sixth cross-defendant on 18 January 2008. 6Mr Shnider obtained separate representation upon becoming a cross-defendant. However, prior to the trial, the proceedings against Mr Shnider were terminated by agreement, wholly or principally because of the bankruptcy of Mr Shnider. Mr Shnider gave evidence that the bankruptcy resulted in part from Mr Wachtenheim's prosecution of the proceedings against him. 7On 13 April 2012, Mr Shnider swore an affidavit relied upon by the other cross-defendants in the proceedings. 8In the course of opening Mr Newell stated, "we won't be [saying] that Mr Shnider was persuaded that it was a good business" and did not disagree with the proposition that Mr Shnider did not rely on any alleged misleading conduct. The cross-claimants' case was that Mr Shnider was a perpetrator rather than a recipient of misleading conduct. 9Notwithstanding these circumstances, Mr Newell foreshadowed a decision to call Mr Shnider as part of his case and ultimately did so. Much of the examination-in-chief has been more in the nature of cross-examination, either by leave under section 38 of the Evidence Act 1995 or, more commonly, without any objection, or any sustained objection, by counsel for the cross-defendants. 10During the course of the examination-in-chief of Mr Shnider, Mr Newell made the application to tender a recording of a mobile phone conversation between himself and Mr Shnider.

(A) The common ground 11This mobile phone conversation between Mr Newell and Mr Shnider occurred on 16 July 2012, some six weeks into the trial which was originally estimated to last ten weeks, in a conference room on level 15 of the District Court building known as the John Maddison Tower. The conference room is located close to court 15D where the hearing was taking place. Thirteen witnesses had given evidence at that point in the trial. 12At about 4.30pm on 16 July 2012, Mr James Turner was sitting in the conference room. Mr Turner is a party to separate proceedings pending in the Supreme Court against some of the cross-defendants. 13Mr Turner was also a witness in these proceedings. He had given evidence on two previous occasions. On both occasions, after some short and seemingly innocuous cross-examination, Mr Turner fainted or claimed to have felt faint, and his evidence was accordingly suspended. One of these occasions was on 16 July 2012. He therefore remained under cross-examination, his evidence having been suspended earlier that day after he stated that he felt unwell at about 12 noon. Precisely why he remained at court for the entire afternoon was not fully explained. 14At about 4.30pm that day, Mr Turner was joined in the conference room by Mr Newell, Mr Wachtenheim, Mr Wachtenheim's solicitor Mr Leonardo Muriniti, and Mr Muriniti's wife Mrs Faith Muriniti. Mrs Muriniti had an administrative role in her husband's legal practice. 15Mr Wachtenheim, the first cross-claimant and, as the recipient of the alleged misrepresentations, the most crucial witness in the cross-claimants' case, had not yet given evidence in the proceedings. 16There is some dispute as to the events that occurred thereafter. It is clear that Mr Wachtenheim telephoned and spoke to Mr Shnider and that thereafter Mr Newell and Mr Shnider had a telephone conversation. Some, perhaps all, of that conversation between Mr Newell and Mr Shnider occurred when Mr Wachtenheim's mobile phone was on loudspeaker. Some of the conversation was recorded. 17On the following day, 17 July 2012, Mr Wachtenheim commenced his oral evidence. His evidence concluded on 30 July 2012, about a week before this application. He gave no evidence about the recorded mobile phone conversation with Mr Shnider, which was not disclosed until the commencement of this application. 18On this application to tender the recording, evidence was given by Mr Turner, Mrs Wachtenheim and Mr Shnider. Mr Wachtenheim and Mr Newell, the parties to the conversations, declined to give evidence as did Mr Muriniti. No explanation was offered as to why no evidence was given by those three persons. 19There was evidence that Mr Turner recorded the mobile phone conversation on his own mobile phone, that when the conversation concluded Mr Wachtenheim took a tape recorder from his bag together with a connection cord to plug into Mr Turner's mobile phone and downloaded the recording to a tape in his tape recorder. Mrs Muriniti offered to type the conversation and so took the tape recorder (with the tape). She says she made five copies of the tape and put it onto a compact disc. 20Ms Dance Petkovski, a paralegal working for Mr Muriniti, also gave evidence. She was given the compact disc by Mr Muriniti for the purpose of producing a transcript, which she did. Some of the parts of the conversation on the compact disc were not capable of being transcribed and were so marked on the transcript. 21With the consent of the parties, I determined the application by reference to the transcript but without listening to the recording. Apart from one small section of the transcript that was not significant to the issues in this application it was agreed that the transcript accurately transcribed what was heard on the recording. The relevant content of the transcript is identified below.

(B) The disputed facts 22Mr Turner and Mrs Wachtenheim both swore affidavits dated 5 August 2012, which gave evidence about the conversations on 16 July 2012 prior to the recording occurring. No notes of these conversations were tendered, both deponents testifying that no notes were kept. 23Mr Turner's affidavit evidence was to the effect that he saw Mr Wachtenheim make a telephone call to David Shnider and heard Mr Wachtenheim say, "David I am here with my barrister and solicitor and with some other people. Robert wants to speak to you," and "David, do you mind if I put you on loudspeaker so we can all hear you, is that alright with you?" 24Mr Turner deposed to seeing Mr Wachtenheim press a button on his mobile phone, thereafter he could hear Mr Shnider's voice. The affidavit records that shortly after David Shnider was put on loudspeaker Mr Wachtenheim said, "David you are now on loudspeaker, we can all hear you," and that David Shnider said, "Okay I understand that, go ahead ". 25Mr Turner says in his affidavit that at this point he understood that "the conversation was not a private conversation and that anyone in the room or who might walk into the room was able to hear the conversation". 26Mr Turner said that he heard Mr Newell commence to ask questions of Mr Shnider, who answered. Mr Turner did not depose to the details of this part of the conversation. Some 20 seconds later, according to Mr Turner's affidavit, an unidentified person said, "it might be good if we made some notes of what David is saying." 27Mr Turner says this conversation caused him to recall the recording function on his own Samsung S2 mobile phone and, for the first time in his life, to record a conversation using that recording function. He says in his affidavit: "I did not tell anyone in the conference room at that time that I was doing this because although I thought that it might have been a good idea to record the conversation because of what I had heard about notes being made I did not give the matter much thought past this point." 28According to his affidavit, at the end of the conversation Mr Turner stopped the recording function on his mobile phone and announced, "I have recorded the conversation on my phone if anyone thinks it may be helpful". Mr Wachtenheim responded, "that was a good idea, I can download the recording from your phone onto my tape recorder as it may come in handy later". Mr Wachtenheim then "pulled out a device which looked like a digital dictaphone" and "also produced a connecting cord so that my mobile phone could be connected to the recording device". Mr Wachtenheim then said, "I know how to download the recording of the conversation from your mobile phone to my recorder, just press the play button", whereupon Mr Turner pressed the play button on his mobile phone and the recording on Mr Wachtenheim's device was completed. 29Mr Turner did not attempt in his affidavit to recount any part of the recorded conversation. 30Mrs Muriniti also swore an affidavit, which recounted the same conversations in near identical terms. One difference was that Mrs Muriniti identified Mr Muriniti as the source of the statement concerning the "good idea if we made some notes" comment. She said she answered Mr Muriniti by saying, "Sorry, all the writing pads and pens have been left in court and the court room has been locked". 31Mrs Muriniti also deposes to having said to Mr Wachtenheim after the recording was transferred to Mr Wachtenheim's tape recorder: "Give me the tape recorder and I will type up the conversation in my own time and put it away in case we need to refer to it at any stage." 32Mr Turner was cross-examined. He appeared to have no health issues arising in his cross-examination although the interrogation was quite vigorous. He gave evidence of an earlier conversation not recorded in his affidavit: that upon entry into the conference room Mr Newell said to Mr Wachtenheim, "Call your brother-in-law. I want to speak to him". 33Mr Turner's recollection of any other conversation on that day was poor, including the recorded conversation. He said he had never before recorded a conversation, nor been a party to a recorded conversation. He said that he believed the conversation was not a private conversation because the door was a "little bit open, not closed". He denied that his lawyers had any involvement in that assertion in his affidavit. He said that there were bags and papers on the conference table including writing paper and that no one had said the court was locked, matters contrary to Mrs Muriniti's evidence. He said no one left the room and that the only phone on the conference table was his mobile phone recording the conversation placed by him on the table in front of him. He said that Mr Newell held Mr Wachtenheim's mobile phone whilst he was talking to Mr Shnider on loudspeaker and Mr Newell sat opposite Mr Turner at the table in the conference room. 34In the absence of evidence from Mr Muriniti and Mr Newell, I would infer that they could see Mr Turner's phone and understood its purpose. Mr Turner gave evidence that both Mr Newell and Mr Muriniti separately told him after the recording that the recording was a "good idea". 35Mrs Muriniti was also cross-examined. She said she saw no need to record or make notes of the events in the conference room before 4 August 2012 when she was asked to prepare her affidavit. She admitted that she did have a "quick look" at Mr Turner's affidavit. Her reference to there being no writing pads and pens and a locked courtroom was not based upon any enquiries or checks by her. 36Mr Shnider also gave evidence. He said Mr Wachtenheim asked him whether he would speak to Mr Newell "in confidence because this could well assist the case clarifying matters in the case and perhaps it will put [me] in a situation where [I] will no longer be needed in the Court". "[I]f it resolved a situation, if it cleared a situation, if it helped the situation I was happy to do it," Mr Shnider said. 37Mr Shnider said he was never told about the other people in the room or about the mobile phone being put on loudspeaker. It was common ground that he was not told about any recording of the conversation. 38Thus, the question of whether Mr Shnider was told that the mobile phone was on loudspeaker and that unspecified other people could hear the conversation depends on whether the evidence of Mr Turner and Mrs Muriniti, or alternatively the evidence of Mr Shnider, should be accepted. 39I doubt whether a person, without prompting, in the absence of a prior arrangement, would ordinarily recall without assistance the precise initial words of a conversation between other persons occurring two weeks prior to the date of their affidavit. At the time there was no significance to Mr Turner and Mrs Wachtenheim in Mr Wachtenheim's reference to "other people" being present. On the other hand, the reference to "other people" and the reference to the mobile phone being on loudspeaker were not so insignificant to Mr Shnider. As indicated earlier in these reasons, Mr Shnider had been sued by Mr Wachtenheim after providing assistance on repeated occasions to Mr Wachtenheim's lawyers. I accept Mr Shnider's evidence that he lacked trust in Mr Newell and Mr Muriniti. 40It is also significant that Mr Wachtenheim and Mr Newell gave no evidence. They were persons, in addition to Mr Shnider, who contributed to the conversation. I am entitled more readily to draw inferences against the cross-claimants because of the absence of evidence from these witnesses and infer that evidence from Mr Newell and Mr Wachtenheim could not have assisted the cross-claimants, according to the principles in Jones v Dunkel (1959) 101 CLR 298. 41Mr Newell did not put to Mr Shnider in cross-examination that Mr Shnider was told that he was on loudspeaker. It is true that this assertion was evidenced by the affidavits relied on by the cross-claimants. Therefore, Mr Shnider had an opportunity to be asked about it in examination-in-chief. Nevertheless, I think this failure should be given some weight, especially when neither Mr Newell nor Mr Wachtenheim gave evidence of the conversation where Mr Shnider was allegedly told that he was to be put on loudspeaker. No other witness except for Mr Wachtenheim could give evidence of Mr Shnider's reaction to this alleged statement, apart from Mr Shnider who denied that that part of the alleged conversation occurred. 42As to the second aspect, whether the conference room door was open, this depends upon the acceptance of Mr Turner's uncorroborated evidence. I am not persuaded that Mr Turner would have a recollection of the conference room door being partly open unless the significance of that matter was explained to him prior to the recording being undertaken. He denied any prior conversation concerning the purpose of the conversation and the recording. Mr Turner's evidence did not leave me with confidence that his recollection was reliable or honest. His denial of involvement by his legal representatives in his characterisation of the conversation as a "private conversation" was especially unconvincing as it was a matter that made no sense to his account in the absence of the provisions of the Act. His denial was not supported by any evidence from Mr Muriniti or Mr Newell. 43Mr Turner's evidence about the door being partially open was not mentioned in his affidavit. 44I found Mr Shnider to be a satisfactory witness. He was quite forceful in his rejections of the proposition that he understood that he was on loudspeaker but was measured and careful in his other responses. Whether or not it was wise for him to engage in the conversation, the suggestion that he would engage in a conversation on loudspeaker before an unspecified group of people is so cavalier as to be difficult to accept. 45I have indicated above the reason Mr Shnider gave as to why he had consented to talking to Mr Newell and what he was told. It seems to me unlikely that he would have consented to speaking to Mr Newell without some reason or incentive being offered. No reason was given on Mr Turner's and Mrs Muriniti's accounts. It seems to me even less likely that in those circumstances he would have agreed to speak on loudspeaker before an unspecified group of people. 46There were also aspects of the unrecorded part of the conversation alleged by Mr Wachtenheim that were problematic: Mr Wachtenheim's reference to "we can all hear you" before Mr Shnider had said anything so that at that stage no one could verify that "they" could all hear him; Mrs Wachtenheim's reference to no paper or pens and the courtroom being locked when she had taken no steps to ascertain the truth of these matters, in the context of Mr Turner's evidence of the objects on the table. 47Perhaps the most unconvincing part of the whole account is that Mr Wachtenheim would coincidentally happen to have in his bag the cord and equipment compatible with Mr Turner's mobile phone so as to be able to immediately download the recording. 48In all these circumstances, I am not persuaded that the recording happened on a whim of Mr Turner. The circumstances (and the unexplained absence of any evidence from Mr Newell, Mr Muriniti or Mr Wachtenheim) persuade me that the matter was planned before the call was made, and that Mr Newell, Mr Muriniti and Mr Wachtenheim were all aware of the plan. I prefer Mr Shnider's evidence, and accept that he was not told about, and did not consent to, either the mobile phone being on loudspeaker or that "other people" were able to hear the conversation.

IV. Law and analysis 49The admissibility of evidence improperly or illegally obtained is governed by section 138 of the Evidence Act 1995 which provides: "138 Exclusion of improperly or illegally obtained evidence (1) Evidence that was obtained: (a) improperly or in contravention of an Australian law, or (b) in consequence of an impropriety or of a contravention of an Australian law, is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained. (2) Without limiting subsection (1), evidence of an admission that was made during or in consequence of questioning, and evidence obtained in consequence of the admission, is taken to have been obtained improperly if the person conducting the questioning: (a) did, or omitted to do, an act in the course of the questioning even though he or she knew or ought reasonably to have known that the act or omission was likely to impair substantially the ability of the person being questioned to respond rationally to the questioning, or (b) made a false statement in the course of the questioning even though he or she knew or ought reasonably to have known that the statement was false and that making the false statement was likely to cause the person who was being questioned to make an admission. (3) Without limiting the matters that the court may take into account under subsection (1), it is to take into account: (a) the probative value of the evidence, and (b) the importance of the evidence in the proceeding, and (c) the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding, and (d) the gravity of the impropriety or contravention, and (e) whether the impropriety or contravention was deliberate or reckless, and (f) whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, and (g) whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention, and (h) the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law. Note. The International Covenant on Civil and Political Rights is set out in Schedule 2 to the Human Rights and Equal Opportunity Commission Act 1986 of the Commonwealth." 50Section 138 of the Evidence Act 1995 raises the following issues: (1)Was there a contravention of Australian law in the obtaining of the evidence. (2)Was the evidence otherwise obtained improperly or in consequence of an impropriety. (3)Was a false statement made in the course of questioning. (4)Was it known or should it have been known that a false statement was being made and was likely to cause an admission. (5)What was the importance and probative value of the evidence. (6)What was the nature of the offence and of the subject matter of the proceedings. (7)Was the impropriety or contravention grave and was it deliberate or reckless. (8)Are proceedings likely in respect of the impropriety or contravention. (9)Could the evidence have been obtained without impropriety or contravention. (10)Does the desirability of admitting the evidence outweigh the undesirability of admitting the evidence obtained improperly or in contravention of Australian law. 51Both parties expressly declined to rely on any provision in the International Covenant on Civil and Political Rights and I could not identify any potential right in the Covenant which might be infringed by the recording of the conversation.

(1) Was there a contravention of an Australian law 52The Surveillance Devices Act 2007 (NSW) ("the Act") replaced earlier listening devices legislation. It contains a number of provisions prohibiting the unauthorised recording of private conversations. 53Section 7(1)(b) of the Act prohibits the use of a listening device to record a "private conversation" to which that person is a party. Section 11 of the Act prohibits a person from publishing or communicating a "private conversation" or the record of that conversation to another person if the first person's knowledge is derived from the use of a listening device. It is a defence to these offences if all the parties to the conversation consent. 54A "private conversation" is defined in section 4 of the Act to mean: "...any words spoken by one person to another person or to other persons in circumstances that may reasonably be taken to indicate that any of those persons desires the words to be listened to only: (a) by themselves, or (b) by themselves and by some other person who has the consent, express or implied, of all of those persons to do so, but does not include a conversation made in any circumstances in which the parties to it ought reasonably to expect that it might be overheard by someone else." 55The cross-claimants do not assert that Mr Shnider consented to the use of the listening device. Rather, they argued, at least initially, that the conversation was not a "private conversation" because Mr Shnider was told that the mobile phone was on loudspeaker before unspecified "other people" and also because the door to the conference room was partially open. 56Ultimately Mr Newell accepted that on the account of Mr Turner and Mrs Muriniti the five people in the conference room were all parties to the conversation because all were intended to hear the words said. Their presence did not deny the conversation being a "private conversation" under section 4 of the Act because they were, on the cross-claimants' case, hearing the conversation consensually. Therefore, they were not persons who "overheard" the conversation. 57Furthermore, there was no evidence that other people were near the conference room and so might have overheard the conversation. I do not think that, in the absence of other evidence, I should infer that at about 4:30pm (commonly 30 minutes after any continuing hearings are adjourned for the day) it was likely that there would be other people outside the conference room on level 15 of the District Court building likely to hear the conversation. There was certainly nothing to indicate to Mr Shnider, on any version of the events, that the conversation was likely to be overheard by persons outside the conference room. 58In the result, Mr Newell accepted that the concluding part of the definition of "private conversation" and the reference therein to "overheard by someone else" had no application in the present case. The conversation remained a private conversation because the five persons in the conference room, on Mr Newell's argument based on Mr Turner's and Mrs Muriniti's evidence, were consensually listening to the conversation. As there was no satisfactory evidence that the conversation could be overheard by someone else, the conversation remained a "private conversation" within the meaning of the Act, notwithstanding the contrary assertion made by Mr Turner in his affidavit. 59This is enough to establish that the recording infringed section 7 of the Act. 60The same conclusion follows if, as I have found, there was no disclosure to Mr Shnider that the mobile phone was on loudspeaker and there was no disclosure that there were other people present. Mr Shnider, a party to the conversation, was not someone who "ought reasonably to expect that [the conversation] might be overheard by someone else". 61Accordingly, there was a contravention of the Act in that there was an unauthorised recording of a private conversation by Mr Turner on his mobile phone and by Mr Wachtenheim on his digital recorder.

(2) Was the evidence obtained improperly or in consequence of an impropriety 62Mr Stanton for the cross-defendants submitted that there were other aspects of impropriety in obtaining this evidence quite apart from the contravention of the Act. He submitted that Mr Turner was still under cross-examination and should not have been present in any discussions involving evidence in the proceedings. Also, Mr Wachtenheim had not yet given evidence and should not have been present during any discussions with a witness who would give evidence on the same subject matter. 63The need for witnesses to give proofs of evidence separately was considered in Day v Perisher Blue Pty Ltd [2005] NSWCA 110 where the Court of Appeal observed: "[30] It has long been regarded as proper practice for legal practitioners to take proofs of evidence from lay witnesses separately and to encourage such witnesses not to discuss their evidence with others and particularly not with other potential witnesses. For various reasons, witnesses do not always abide by those instructions and their credibility suffers accordingly." 64In Roads Corporation v Thomas Love [2010] VSC 253, Vickery J summarised the decision in Day v Perisher Blue as follows: "[37] In Day v Perisher Blue Pty Ltd the New South Wales Court of Appeal held that the convening of a pre-trial conference by a legal practitioner, in which multiple witnesses attended using teleconference facilities and discussed the evidence which they intended to give at the trial, seriously undermined the trial process and was improper." 65I respectfully agree. The impropriety of counsel and solicitor in having Mr Turner and Mr Wachtenheim present at the time of the conversation with Mr Shnider on loudspeaker is a basis for exclusion. I would not be satisfied that the mere presence of Mr Wachtenheim and Mr Turner resulted in the evidence being obtained improperly or in consequence of an impropriety. However, Mr Turner made the initial recording and Mr Wachtenheim procured the evidence by his initial conversation with Mr Shnider and also further recorded the conversation. These matters establish that the evidence was obtained improperly and in consequence of an impropriety. This satisfies the requirements of section 138(1)(a) and (b) of the Evidence Act 1995. 66Another suggested aspect of impropriety is the recording of the conversation without consent. 67The recording of a conversation without consent was considered in See v Hardman & Anor [2002] NSWSC 234 where Bryson J in speaking of secretly recording conversations in a meeting stated: "[26] It can be seen from the text of subsection (1) that evidence may be obtained improperly or in consequence of an impropriety without there being any breach of a law, and that the concept of what is improper or what is an impropriety is a different concept to disobedience of statute law. In terms of ordinary behaviour and conduct when engaged in negotiations I see no room to doubt that it is an impropriety to make a secret recording of a conversation bearing on some business interest or other important interest, such as in this case entitlements to interests in a deceased person's estate. Such behaviour is of an altogether different kind to making notes during the course of the conversation where others present can observe that notes are being taken, and it is also altogether different to preparing for one's own use after a conversation a memorandum or note of what one then remembers took place. [27] In ordinary business and social behaviour there is, in my understanding, a very strong expectation that there will not be a secret recording of a conversation but that any process of recording will be revealed, so as to give those recorded an opportunity to decide whether or not they will participate. If I conjure up for myself what could be expected to happen at the meeting of 10 May 2001 or what could be expected to happen in ordinary and reasonable conduct of persons in this community participating in a business meeting of any kind, I feel no doubt that discovery in the course of a meeting that a secret recording was being made would disrupt proceedings, with a high likelihood that the discovery would lead to the immediate withdrawal of those not involved in making the recording. The view of ordinary reasonable people in Australian society that behaviour of a particular kind is an impropriety is what makes it an impropriety. What the community thinks about secret recordings is, in my view, altogether clear and furnishes the explanation for the enactment of legislation such as the Listening Devices Act, notwithstanding the availability of a quite different view of the significance of making secret recordings. [28] I understand, both from such events as the enactment of the Listening Devices Act and also from my general understanding of values and behaviour in the community of which I must take notice, that such conduct is not tolerated and is regarded as an extreme impropriety. The nature of the breach of an Australian law and the nature of the impropriety have a part in the weighing exercise and in appraisal of the undesirability of admitting evidence to which subsection 138 (1) refers. I am of the view that the tape is evidence which was obtained improperly and that the transcript is evidence which was obtained in consequence of an impropriety." 68I respectfully agree. The recording of the conversation, without the consent of Mr Shnider, is an impropriety within section 138(1)(a) and (b) of the Evidence Act 1995. 69Further, the gravity of the impropriety of the secret recording is increased by the circumstances of this case in that it involved counsel and solicitor and it involved an impropriety in relation to the administration of justice as it concerned proceedings then being heard.

(3) Was a false statement made in the course of questioning 70I have indicated already that I prefer the evidence of Mr Shnider to that of Mr Turner and Mrs Muriniti, in circumstances where Mr Wachtenheim, Mr Newell and Mr Muriniti did not give evidence. 71In those circumstances, I accept that Mr Shnider was told by Mr Wachtenheim that the purpose of the mobile phone call was so that he might not need to give evidence. A statement by Mr Wachtenheim indicating that Mr Shnider might not be required to give evidence carries with it the implication that Mr Wachtenheim had such a belief. Whether Mr Wachtenheim, or for that matter, Mr Newell, had that belief remains uncertain. Mr Shnider had not sworn affidavits for the cross-claimants. There was no suggestion that he would swear another affidavit. His affidavit relied upon by the cross-defendants contained evidence inconsistent with the cross-claimants' case. For him not to be cross-examined would likely have impacted adversely, and significantly, on the cross-claimants' case. Whatever Mr Shnider might say in the mobile phone conversation, however favourable to Mr Wachtenheim, would be of no assistance unless he gave further evidence. I am entitled to more readily infer in the absence of evidence from Mr Wachtenheim and Mr Newell, that the purpose of the discussion was either to assist Mr Newell in the examination or cross-examination of Mr Shnider. 72However, I am not prepared to conclude that Mr Shnider was told a statement known to be false. The test in Briginshaw v Briginshaw (1938) 60 CLR 336 causes me to be cautious to make such a finding of serious misconduct relying only upon the inevitably imperfect recollection of an oral conversation, together with inferences from circumstances.

(4) Was it, or should it have been known, that a false statement was likely to cause an admission 73I have not concluded that any false statement was made so this issue does not arise.

(5) What was the probative value of the evidence 74The supposed crucial aspect of the recording was that Mr Shnider made a comment linking Mr George Costi with a representation of a 40 per cent gross profit margin. But no claim is made by the cross-claimants relying upon a representation by Mr George Costi of a gross profit margin of 40 per cent. Nor is any claim made which relies upon a representation to Mr Shnider of a gross profit margin of 40 per cent. 75Accordingly, any representation to Mr Shnider by Mr George Costi concerning a 40 per cent gross profit margin is not directly relevant to any fact in issue. 76Further, the evidence comprises a recollection by Mr Shnider of something Mr George Costi said to him some eight years ago. It would be difficult to be satisfied about the precise content of the words used in view of the lapse of time and the lack of any corroborating material. 77Also, the terms of the recording lack clarity. The crucial words occur very early in the recording in a sentence only partly recorded. That is, the alleged crucial sentence cannot be heard in its full context. Mr Shnider uses the word "would", leaving uncertain the precise representation Mr Shnider is speaking about, let alone the precise representation made by Mr George Costi. 78In my view that evidence is of limited value. Mr Shnider gave evidence contrary to such a representation. Under the Evidence Act 1995 a previous representation made to Mr Newell could be evidence of the facts asserted if Mr Shnider had personal knowledge of Mr George Costi making the representation but that was not established. The evidence at best could only impugn Mr Shnider's credit. But when the few words are divorced from their context and the meaning is uncertain, the impact on Mr Shnider's credit must be minor or non-existent. 79Further, the cross-claimants had, and tendered, a written record from 2008 that provided some evidence from Mr Shnider of the same proposition that Mr George Costi had made a representation concerning a 40 per cent gross profit margin. The further recording of a conversation some years later making the same point seems to me to be of little additional value.

(6) What was the nature of the offence and the subject matter of the proceedings 80These proceedings do not concern an offence but a contravention of the Trade Practices Act 1974 (Cth) giving rise to a claim for damages. This does not appear to me to strengthen the reasons why the evidence should be admitted.

(7) Was the impropriety or contravention grave and was it deliberate or reckless 81I indicated above that the impropriety was grave because it involved counsel and solicitor and concerned proceedings then being heard. In the absence of any evidence from Mr Newell and Mr Muriniti, on all accounts there was a disregard of the questions of propriety and lawfulness of the conduct undertaken in speaking to Mr Shnider on loudspeaker with other relevant witnesses being present. The presence of Mr Wachtenheim, the cross-claimants' primary witness, who was yet to give evidence, and Mr Turner, a witness then under cross-examination, must have alerted counsel to the inappropriateness of discussing on loudspeaker factual matters relevant to the evidence of those two witnesses. No reason was advanced as to why Mr Turner and Mr Wachtenheim were not asked to leave the room. No evidence was provided as to what thought, if any, went into the decision to speak to Mr Shnider in those circumstances. 82Further, Mr Turner gave evidence that he placed his mobile phone onto the table in front of Mr Newell. In the absence of contrary evidence from Mr Newell and Mr Muriniti I have found that they understood its purpose: for recording the conversation. It follows that there was knowledge of, or reckless disregard of, the unlawfulness and impropriety. 83Even on Mr Turner's account, Mr Newell and Mr Murinti became aware of the recording immediately after the conversation concluded, when Mr Turner announced it and they said it was a good idea. It follows that the breach of law was either known at the time it was occurring or immediately afterwards when it came to the attention of counsel and solicitor. The circumstance that the recording was in connection with judicial proceedings and that the recording could readily and reasonably have been immediately destroyed are further factors increasing the gravity of the conduct.

(8) Are proceedings likely in respect of the impropriety or contravention 84I am unable to conclude that any proceedings are likely in respect of the impropriety by Mr Newell and Mr Muriniti or in respect of the contravention by Mr Turner and Mr Wachtenheim. Accordingly, this is not a case where I am satisfied that there is some other remedy likely in respect of the inappropriate conduct engaged in by the cross-claimants and their legal advisors.

(9) Could the evidence be obtained without impropriety or contravention 85It cannot be supposed that the recording could have been obtained without impropriety. Although Mr Wachtenheim and Mr Turner could have been excluded from the room, avoidance of impropriety required the consent of Mr Shnider to the recording. That seems to me to have been most unlikely and no submission to the contrary was put. 86Of course there was no bar to contacting Mr Shnider. That contact could have occurred without the presence of Mr Turner or Mr Wachtenheim and in circumstances where the phone call was not recorded. At all times the cross-claimants retained the opportunity to call Mr Shnider as a witness or cross-examine him in respect of matters concerning Mr George Costi's representations. Further, I have already indicated that other written records to the same effect were in existence.

(10) Does the desirability of admitting the evidence outweigh the undesirability of admitting evidence obtained improperly or in contravention of an Australian law 87In my view, there is no reason why the evidence should be admitted. It does not have any probative value in respect of a matter in issue and has limited forensic significance. On the other hand, the breach of the law and the impropriety associated with it are grave and warrant the firm disapproval of this Court. 88Accordingly, for these reasons I rejected the tender of the recording.

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