In the matter of HIH Insurance Limited (In Liquidation); In the matter of HIH Insurance Limited (In Liquidation); In the matter of HIH Insurance Limited (In Liquidation); Cuong Ly v HIH Insurance Limited

Supreme Court of NSW|2015-02-27|Before: Brereton J, Young J

SWSC 1045 Sugden v Lord St Leonards (1876) 1 PD 154 The Queen v Hissey (1973) 6 SASR 280 Thomas v Connell (1838) 4 M&W 267; [1838] 150 ER 1429 Yorke v Lucas (1985) 158 CLR 661 Category: Procedural and other rulings Parties: Craig Richard Baldock and others (plaintiffs) Anthony Gregory McGrath in his capacity as Liquidator of HIH Insurance Limited (in liquidation) (first defendant) Christopher John Honey in his capacity as Liquidator of HIH Insurance Limited (in liquidation) (second defendant) Anthony Gregory McGrath in his capacity as Scheme Administrator of FAI Insurance Company Ltd (in liquidation and subject to a scheme of arrangement) (third defendant) Christopher John Honey in his capacity as Scheme Administrator of FAI General Insurance Company Ltd (in liquidation and subject to a scheme of arrangement) (fourth defendant) Anthony Gregory McGrath in his capacity as Scheme Administrator of HIH Casualty and General Insurance Ltd (in liquidation and subject to a scheme of arrangement) (fifth defendant) Christopher John Honey in his capacity as Scheme Administrator of HIH Casualty and General Insurance Ltd (in liquidation and subject to a scheme of arrangement) (sixth defendant) Anthony Gregory McGrath in his capacity as Scheme Administrator of CIC Insurance Ltd (in liquidation and subject to a scheme of arrangement) (seventh defendant) Christopher John Honey in his capacity as Scheme Administrator of CIC Insurance Ltd (in liquidation and subject to a scheme of arrangement) (eighth defendant) Representation: Counsel: G Sirtes SC with R White (plaintiffs) J Lockhart SC with R Higgins (defendants)

Judgment 1 - Objection to Dr Coulton's fourth report

HIS HONOUR: The plaintiffs tender a fourth report of Dr Coulton dated 24 February 2015, that is to say today, and served belatedly today on the first day of the hearing, contrary to directions previously made in the case as to the service of evidence, including expert evidence. In part, the report responds to an equally belated third report of the defendant's expert, Mr Gower, dated 23 February 2015, which was served yesterday. The first 11 paragraphs of Dr Coulton's report are, it is not disputed, legitimately in response to Mr Gower's belated report, to which the plaintiff has not taken objection on the basis that they are not unable to meet it and that Dr Coulton's fourth report addresses it.
The defendants, however, object to the balance of Dr Coulton's fourth report -being the second paragraph 10 through 14 of that report. In that part of his report, Dr Coulton substitutes, for the adjustments to the HIH accounts which he assumed in his earlier reports (which were based on those found to be appropriate by Owen J in the HIH Royal Commission), a single adjustment for the year ended 1999 and another single adjustment for the year ended June 2000, both on account of the "Hanover Reinsurance overstatement" (as I shall call it for present convenience) - in the first case of $92.4 million, and in the second case of $108 million as to operating profit and $192 million as to assets. This is to be contrasted with the adjustments assumed in Dr Coulton's earlier reports which, for present purposes, can conveniently be identified from paragraph 84 of his report in the Baldock proceedings, identifying a total of $577 million of adjustments for the year ended 30 June 1999, of which $92 million was attributable to Hanover, and $1,175.3 million for the year ended 30 June 2000, of which $192 million was attributable to Hanover.
In other words, it will be seen that the adjustments to the published HIH accounts upon which Dr Coulton's earlier reports were based included, but went far beyond, the adjustments in respect of the Hanover Reinsurance contracts. In the fourth report he provides for an adjustment only in respect of the Hanover Reinsurance contracts, and exclude the other adjustments which he had earlier assumed. This is evidently in response to the defendants' notified objections to Dr Coulton's earlier reports. Although formalised in the notice of objection served before the hearing, those objections had been foreshadowed at least six months ago.
The defendant's response to Dr Coulton's earlier reports involved two main approaches. The first was to object to their admissibility, in whole or in very substantial part, essentially on the basis that the main assumptions upon which they rely were not properly proven. There are three limbs to that submission. The first relates to reliance on data from the Morningstar DatAnalysis Premium database, the authenticity, provenance, reliability, professional acceptability or other admissibility of which is said not to be established. The fourth report does not address that objection, which remains to be considered. The second limb to the argument concerns the reliance of the earlier Coulton reports on agreed or admitted facts recorded in the sentencing remarks in two related criminal proceedings. That also is not directly addressed by the present report, although it is conceivable that the report, if admitted, would result in the plaintiffs no longer relying on those matters. What this fourth report does directly address is the third limb of the objection, which is the reliance of Dr Coulton in his earlier reports on adjustments to the HIH published accounts found to be appropriate by Owen J in the report of the HIH Royal Commission.
Objection was taken to the admissibility of the Royal Commission report in these proceedings, and thus to the reliance by Dr Coulton on conclusions reached or evidence given in those proceedings, for assumptions which it seemed were not otherwise able to be proved in this case. If, as now seems likely, Dr Coulton's evidence is to be limited to the impact of the adjustment in respect of the Hanover reinsurance contract, then the likely rejection of reliance on the HIH report would not affect that, as the amounts of the overstatements in the published accounts referable to the Hanover reinsurance contracts are now the subject of a statement of agreed facts in these proceedings: see PXO1, paragraphs 6 and 10.
The defendants legitimately ask why it has taken until now for this to be done when the objection was foreshadowed, as I have said, six months ago, and that is a perfectly reasonable complaint. On the other hand, the defendants have not submitted that they are unable to deal with this evidence, or are otherwise prejudiced by its reception into evidence.
As it seems to me, the so-called new evidence is well within the scope of the dispute already defined by the experts. It is commonplace in litigation, simple or complex, for some of the assumptions upon which an expert relies to be the subject of successful objection, or to be demonstrated to be wrong in the course of the evidence. In such a case, it is equally common for the expert to be asked for the consequences for her or his opinion if that particular assumption be rejected or not available. Sometimes the expert will say that the removal of certain assumptions makes no difference whatsoever. On other occasions, the expert will say that it completely undermines the opinion. In yet other cases, the expert will say that it requires some modification to the opinion. That is exactly what is happening in this case. The expert is effectively being asked to assume that not all the adjustments which he formerly assumed should be made are to be made, but only one of them, and to express his opinion based on that single adjustment instead of the multiple adjustments.
For that reason, I can well understand why no complaint of inability to deal with this has been made.
In addition, a substantial attack on Dr Coulton's evidence is directed not to the assumptions that he made, but to his methodology, and in particular the model he uses for deducing value. That attack is, it seems to me, quite unaffected by this evidence, and if correct, would demonstrate that Dr Coulton's approach, which has not changed save for the assumptions on which it relies, is an unacceptable one.
For those reasons, it seems to me that, first, the evidence, though belated, is well within the scope of the disputed territory between the experts as already defined; secondly, it has not been shown that its reception will cause any prejudice to the defendants; and thirdly, it is tendered to cure potential defects that would be occasioned by the probable rejection of many, or at least some, of the assumptions on which Dr Coulton has hitherto made.
I therefore decline to reject paragraphs 10 through 14 of the report. I will deal with the report generally, and any specific objections to it, once I have dealt with the others of Dr Coulton's reports.

Judgment 2 - Objection to Morningstar Data

HIS HONOUR: As I foreshadowed in the last evidentiary judgment delivered, one of the objections to Mr Coulton's first, second and third reports is that it relies on data extracted from the Morningstar DatAnalysis Premium database, which appears to be a website that records data from the financial statements of listed companies, but as Mr Lockhart SC correctly points out, goes beyond just replicating that data, because it includes ratios and multiples that one would not normally expect to see in a company's published financial statements. Relevantly for present purposes, in that category it includes the "ROE" or "return on equity" ratio, and the "price to book value" ("PBV") valuation multiple, along with many others. It seems likely that that involves the application of some analysis, although it could be purely mathematical, to the published financial statements of the companies in question.
The plaintiff tenders, at tab 74 of the tender bundle, the material extracted from Morningstar in respect of a number of insurance companies that are, for valuation purposes, said by the plaintiff to be comparable to HIH. In his first three reports, Mr Coulton used in particular the ROE ratio and PBV multiple of those comparable companies, for the purpose of a regression analysis to enable him to deduce a formula for attributing a value to shares in HIH.
The defendants object to the tender on the basis that there is no evidence as to the way in which any such analysis of the financial statements was undertaken by Morningstar, or as to whether ROE was calculated in the way in which Mr Coulton defines it in Appendix C, in which he says: We next define Return on Equity (ROE) as income divided by beginning-of-period shareholders' equity (i.e. ROEt = Incomet/BVEt-1), and GROWTHt-1 as cumulative growth in shareholders' equity through the beginning of future year t (i.e., GROWTHt-1 = BVE t-1/BVE0).
Although it was submitted that this indicated that return on equity, as defined by Mr Coulton, involved a growth component, as well as dividing income by beginning of period shareholders' equity, I do not think that is at all what Mr Coulton says. He proffers a definition of return on equity, and then in the same paragraph a definition of growth, separated by the conjunction "and". That this is so is clearly illustrated by the two separate equations set out in parentheses in that passage.
The experts were required, pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 31.24, to confer generally and endeavour to reach agreement on matters in issue and to prepare a joint report specifying matters agreed and matters not agreed and reasons for any disagreement. They have done so.
In Mr Gower's first report, he identified (at paragraph 37) the 36 observations relied on by Dr Coulton for his return of equity calculation, and (at paragraph 38) the 31 observations that he was able to identify, and another five which were said not to be set out in the Coulton report, for price to book value. In Dr Gower's second report, the same material appears at paragraphs 158, 159 and 160. In paragraph 39 of the first report, he said that in the absence of data for the abovementioned five observations for price to book value, Dr Coulton's linear regression model was unable to be replicated from the data provided. At paragraph 160 of the second report, he said that the linear regression model was based on adding a further eight observations, and then at paragraph 161, that in the absence of data for the abovementioned five observations, his linear regression model was unable to be replicated.
In the experts' joint report following the directed conference, the agreed matters include (at 4(g)): Dr Coulton's regression calculations and model in the Second Coulton Report and the Third Coulton Report are agreed (ie. the mechanics of the model) as providing an accurate assessment of the data inputs and summary output. Similarly, Mr Gower's "theoretical value" calculations of comparator companies in the Second Gower Report at paragraph 123 is agreed.
I interpose that I do not suggest that that involves any express agreement to the accuracy of the data inputs, but then (in 4(h)): In respect of the First Coulton Report, five of the price book value figures used in the calculations have not been disclosed, as summarised in the First Gower Report at Table 2 and the Second Gower Report at Table 9. These data points can be determined by reference to the Second Coulton Report and the Third Coulton Report.
Amongst the disagreed matters (at 2(f)) are: The comparator entities' results are for 1993 to 2000 and therefore do not reflect the financial results and position of these entities at the valuation dates."
Mr Gower's comment on that issue is: The price earnings ratios which Dr Coulton adopts reflect historic prices and earnings which variously range over the period FY 1993 to FY 2000. These ratios therefore do not necessarily reflect the position of these comparator companies at the relevant valuation dates causing reliance on these ratios (to the extent that they have any relevance) for valuations of HIH at the valuation dates to be inappropriate.
As it seems to me, Mr Gower disputes the relevance and suitability of the data as appropriate comparables, but I can find nothing in the joint report, nor in his own reports, to indicate any suggestion that, insofar as it goes, the data is otherwise than reliable, or taken from a reliable and reputable source. In short, I do not see that there is any dispute between the experts as to the reliability of the data that Dr Coulton has extracted from Morningstar. That data has been in the possession of the defendants for quite some time, and had they wished to dispute it, they have had ample opportunity to investigate its source and origin and ascertain whether there is in truth anything to be disputed about it. The best that could be said on that question today, when asked whether the material was genuinely in dispute, was that "it may be", essentially depending on what was established about its provenance.
(NSW) Civil Procedure Act 2005, s 70(1)(a) and (b), provide as follows: (1) At any stage of the proceedings, the court: (a) may, by order, dispense with the rules of evidence for proving any matter that is not bona fide in dispute, also with such rules of evidence as may give rise to expense or delay, and (b) without limiting the generality of paragraph (a), may, by order, dispense with the proof of handwriting, documents, the identity of parties or parcels of land, or of authority,…
In Williamson v Mig Aero Pty Ltd (unreported, NSWSC, McLelland J, 27 June 1990), his Honour employed the predecessor section, namely (NSW) Supreme Court Act 1970, s 82, to dispense with the rules of evidence to the extent that they would require strict proof that a microfiche of a telephone record was a business record of Telecom Australia. His Honour said: I do not consider that there is any implied limitation on the power expressly conferred on the Court by s 82 other than that ordinarily applicable to discretionary powers of a procedural nature, namely that the Court should act in the manner which it considers best calculated to advance the interest of justice in the particular circumstances. In my opinion, expense and delay would be incurred if the defendants were required to formally prove the status of the document in accordance with the strict rules of evidence to an extent not justified by the requirements of justice as between the parties and I am of the view that the interests of justice would be promoted by the making of an appropriate order under s 82 enabling proof of the document as a business record of Telecom through the evidence of whoever it was that procured it from Telecom.
In Ishac v David Securities Pty Ltd (unreported, NSWSC, Young J, 13 December 1991), his Honour considered the tender of a transcript of evidence given in other proceedings. His Honour said: A further question arises as to the scope of s 82 itself. As is truly said by the editor of the Supreme Court Practice, it is significant that although in other States the comparable provision has been read restrictively, in New South Wales the provision occurs in the Act rather than in the rules and the approach of New South Wales Courts from the section's inception was to read it purposefully and expansively. The purpose of the section is to avoid a waste of time at trials.
These cases were summarised by Sperling J in Roach v Page (No 26) [2003] NSWSC 1045 (at [10]) where, though rejecting the tender of a document under the section, his Honour said: The section reposes a wide discretion in the Court. It is not a discretion hedged in by conditions express or implied: Ishac v David Securities. The Court should act in the manner it considers best calculated to advance the interests of justice in the particular circumstances: Williamson v Mig Aero.
The matters that I consider relevant here are, first, that on the face of the documents tendered, they appear to be produced regularly from an independent source and extracted in the course of the operations of a business providing information to the investment community from the published records of listed corporations; secondly, that the material has been the subject of deployment in Mr Coulton's expert report and available for consideration by Mr Gower, who has taken issue with many aspects of Mr Coulton's report, but not the reliability of the data on which he relies; thirdly, that the material is apparently available from a public source and could easily have been investigated, examined, and considered by the defendants if they genuinely wished to dispute its reliability; and fourthly, there has been no indication of any actual dispute as to the reliability of the material.
Accordingly, both because I do not consider that the matter is bona fide in dispute, and also because requiring strict proof of the material would give rise to expense and delay, pursuant to Civil Procedure Act, s 70, I order that so much of the rules of evidence be dispensed with as would preclude the reception into evidence of the material at tab 74, which is therefore admitted.

Judgment 3 - Objection to Arthur Andersen Letter

The document at tab 51 is objected to. It is a letter of 16 May 2000 from Arthur Andersen to an officer of HIH, and is tendered to prove the knowledge of the recipient, and potentially others, of the incorrect treatment of the Hannover reinsurance contracts in the HIH accounts. The defendants object that it cannot do so.
The allegation of misrepresentation is admitted on the pleadings. The amount of the misrepresentation is the subject of the statement of agreed facts. Proof of knowledge on the part of the misrepresentor is not a material fact in a claim for misleading and deceptive conduct such as that pleaded in this case against HIH. Knowledge would be relevant only to the accessorial liability case against C&G and FAI. The plaintiffs submit that, as the reinsurance arrangements were arrangements of those companies and were reflected in their accounts, it may be possible to infer that officers of those companies were aware of the Arthur Andersen letter.
If that were the only issue in respect of the letter, I would be inclined to admit it on the basis that, with other evidence, it might just arguably be able to support such an inference. However, the document is plainly addressed not to the accounting treatment of the reinsurance contracts, but to their taxation treatment. When one reads the advice, it is clear that it is reliant on "the current tax law and Australian Taxation Office practice", and is directed to the classification of the contracts for income tax purposes. It refers to income tax rulings and the Commissioner's approach to such matters. It addresses the consequences that would apply under the Income Tax Assessment Act. It does not refer to accounting standards or ASX requirements in respect of financial statements. It expressly distinguishes, in the summary of the advice, the accounting classification and APRA treatment of the arrangement from its taxation treatment.
In those circumstances, the possibility that this would support an inference that the controlled entities knew of the misclassification seems to me so remote as not to justify its admissibility. I reject the document at tab 51.

Judgment 4 - Admissibility of prior convictions

The plaintiffs tender, behind tabs 84 and 85 of the tender bundle, the remarks on sentence of Wood CJ at CL in R v Williams [2005] NSWSC 315; (2005) 216 ALR 113, and of Bell J, as her Honour then was, in R v Fodera [2007] NSWSC 1194; (2007) 65 ACSR 109, in each case by tendering a copy of the reported judgment in the law report series to which I have referred.
In each of these proceedings, the plaintiffs allege in the current version of their pleading that HIH Insurance Ltd engaged in certain misleading and deceptive conduct in connection with the published accounts for 1999 and 2000 by treating, in its consolidated accounts, the Hanover reinsurance contracts as true reinsurance rather than financial reinsurance contracts, and thereby overstating those accounts - in the first case by $92 million, and in the second case by $192 million. On that allegation, of course, the knowledge of HIH is not a material fact. However, the plaintiffs also allege that FAI General Insurance Company Ltd, which for convenience I refer to as FAI, and HIH Casualty and General Insurance Ltd, which for convenience I refer to as C&G, each of which were subsidiaries and controlled entities of HIH at the relevant time, are liable as accessories on the basis that they were knowingly concerned in HIH's contravening conduct.
As is well established [see, for example, Yorke v Lucas (1985) 158 CLR 661 and Giorgianni v The Queen (1985) 156 CLR 473], an allegation that a party is liable as an accessory by way of being "knowingly concerned" in a contravention requires proof that the alleged accessory knew of the contravening conduct and participated in it. Here, it is alleged that the requisite participation was by including similar treatment of the Hanover reinsurance contracts in the accounts of the controlled entities, which were subsequently consolidated into HIH's accounts. The knowledge that this was misleading is sought to be proved against the subsidiaries through relevant officers of C&G and FAI, and in particular Mr Williams and Mr Fodera.
For present purposes, the argument has been limited to the remarks on sentence in R v Williams, and this judgment formally deals only with that tender, although it may well be that what I say will have the effect of resolving the questions that arise on the tender of the remarks in R v Fodera also.
The judgment of Wood CJ in CL in R v Williams records that Mr Williams pleaded guilty to three counts in an indictment, the terms of which are then set out and which include, in at least the second count, that he made or authorised a statement which to his knowledge was misleading by overstating the operating profit for the 1999 year by $92.4 million. His Honour's reasons also set out the terms of the indictment, including the particulars, and the agreed statement of facts which was tendered in the criminal proceedings and which set out the facts upon which it was agreed he was to be sentenced. The judgment also records that Mr Williams was convicted of the counts on which he was indicted. On its face, therefore, the judgment in question has the potential to prove that Mr Williams was convicted on at least one count which included, as an element of the offence, knowledge that a statement in the accounts for 1999 was misleading and, insofar as the agreed statement of facts might be admissible, further detail of his knowledge.
However, Mr Williams is not a party in the present proceedings before me. Nor, at least so far as presently appears, is he to be a witness in these proceedings. It is sought to use his conviction, and perhaps also the statement of facts in the criminal proceedings, as proof in these proceedings against the companies of which he was a director of the requisite knowledge on their part of the false or misleading character of the accounts.
In 1698, in R v Warden of the Fleet (1698) 12 Mod Rep 337, 339; 88 ER 1363, 1364, it was said: Conviction at the suit of the King for battery et cetera cannot be given in evidence in an action for trespass for the same battery or vice versa.
A little more recently, in Castrique v The Imrie (1870) LR 4 HL 414, 434, it was said: A judgment in an English Court is not conclusive as to anything but the point decided and therefore a judgment of conviction on an indictment for forging a bill of exchange, though conclusive as to the prisoner being a convicted felon, is not only not conclusive but is not even admissible evidence of the forgery in an action on the bill, though the conviction must have proceeded on the ground that the bill was forged.
Although there was some authority in the opposite direction [see, for example, In re Crippen (deceased) [1911] P 108, 113-114, in which it was suggested that evidence of a conviction might be at least prima facie, though not conclusive, evidence of the facts for which it stood], the question was resolved at common law by the judgment of the Court of Appeal in Hollington v F Hewthorn & Co Ltd [1943] KB 587; [1943] 2 All ER 35, 41. That was a case in which one of the defendants in proceedings for damages for negligence had been convicted for careless driving in criminal proceedings. The other defendant in the civil proceedings was his employer, whose car the first defendant had been driving. It was held that the conviction for careless driving was inadmissible as evidence of negligence in the civil proceedings, essentially on the ground that the conviction merely proved that another Court, acting on evidence that was unknown to the Court trying the civil proceedings, was of the opinion that the defendant was guilty of careless driving. The judgment was explained relatively recently in this court by Campbell J, as his Honour then was, in Gonzales v Claridades [2003] NSWSC 508; (2003) 58 NSWLR 188, where his Honour said (at [66]) that it was the hearsay rule, possibly in conjunction with the opinion rule, that underlay Hollington v Hewthorn: That the accused was guilty of whatever crime he had been held to have committed was a representation made otherwise than in the course of giving evidence in the civil proceedings in which the evidence of the conviction was sought to be adduced and in which the appropriate participants in the criminal trial (judge and/or jury) intended to assert by that representation and hence were it not for s 92(2)(c), the hearsay rule as defined in s 59 Evidence Act 1995 (NSW) and as expanded by the definition of, 'Previous representation,' in the dictionary to that Act would apply to it. Further, that the person was guilty of the crime of which he had been convicted is at least arguably an opinion of the relevant participants in the criminal trial and so, were it not for s 92(2)(c), might possibly fall within the opinion rule as defined by s 76 Evidence Act 1995 (NSW).
However, the rule in Hollington v Hewthorn did not apply to admissions made in the course of the criminal proceeding, as distinct from evidence of the conviction itself, and this exception extended to a plea of guilty. In Hollington v Hewthorn itself, Goddard LJ, as the later Lord Chief Justice then was, said (at All ER 42E): It may frequently happen that where bigamy or any other crime has to be proved in a civil proceeding the prisoner on his trial had pleaded guilty. Proof by a witness present at the trial of the confession is admissible because an admission can always be given in evidence against the party who made it. In the present case, had the defendant before the magistrates pleaded guilty or made some admission in giving evidence that would have supported the plaintiff's case, this could have been proved, but not the result of the trial.
That has been followed in this State by McClemens J, as the later Chief Judge at Common Law then was, in Rakay v MacFarlane (1961) 78 WN (NSW) 488, admitting in civil proceedings for ejectment a plea of guilty by the lessee in criminal proceedings to a charge of illegal use of the premises. His Honour said (at 492): In this case the plea of guilty … is admissible as some evidence of a breach on the premises of the statutes relating to the sale of liquor.
His Honour then referred to the passage from Hollington v Hewthorn which I have cited above.
The defendant submitted that admissions are made only for the purpose of the proceedings in which they are made. That will often be the case in respect of formal admissions made pursuant to a notice to admit facts or announced by counsel in the course of proceedings. That was the case in the leading authority, referred to by the defendants, of Dawson v Great Central Railway (1919) 88 LJKB 1177 (in particular at 1181-1182) where counsel had admitted in the course of proceedings the manner in which the deceased had been killed and that the accident in question happened. After a new trial was ordered, the Court was asked to say that those who would conduct the case at the new trial would be at liberty to withdraw the admission or to make it again, and Swinfen Eady MR said: The admission was only for the purpose of that trial. They may make another admission. It is not a question of withdrawal … they are not bound on the second trial by an admission made on the first trial for the purpose of that trial.
I do not think that that establishes that all admissions made in the course of proceedings are made only for the purpose of those proceedings, although that will often be the case. It does not, in my view, extend to a plea of guilty which proceeds to found a conviction. A plea of guilty is not made for the purposes of the proceedings only, but involves, as it seems to me, an admission of the offence for all purposes. The conviction that it founds is, of course, conclusive.
A statement of agreed facts, however, is in a different position and, in my view, the approach referred to in Dawson v Great Central Railway is applicable to a statement of agreed facts. In Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301, Goldberg J was asked to make orders pursuant to (Cth) Trade Practices Act, s 83, so that they could found subsequent civil proceedings. His Honour said (at [116]-[118]): Where parties submit an agreed statement of facts, it may not be appropriate to regard formal admissions as findings of fact for the purposes of s 83. In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2), above, Finkelstein J stated (at 183-4): 'The general rule is that formal admissions are only binding for the purpose of the particular case in which they are made: Dawson v Great Central Railway (1919) 88 LJKB 1177 at 1181-2. It is not clear whether a judge who acts on formal admissions is making findings of fact. I rather think he is not, because the purpose of an admission, such as may be made in a pleading, is to dispense with the need to prove the admitted fact. That is quite different from a case where the judge hears evidence and makes findings based on that evidence. In Australian Competition and Consumer Commission v Monza Imports Pty Ltd (2001) ATPR 41-843; [2001] FCA 1455, Carr J did not make findings of fact for the purpose of s 83 on the basis that the facts had not been established and tested before the court. At 43,440 he stated: 'I am inclined to the view that the Parliament intended "… a finding of any fact by a court …" to mean a finding made after a hearing. The apparent purpose of the provision is to save inconvenience and expense in requiring a matter to be proved more than once, but at the same time protecting the interests of a respondent by conferring on such a finding only the status of prima facie evidence in subsequent proceedings.' Carr J made similar comments in related proceedings, Australian Competition and Consumer Commission v Apollo Optical (Aust) Pty Ltd [2001] FCA 1456. Even if these statements were not correct, it would seem, as a matter of principle, that where evidence has not been tendered, but the parties rely upon statements of agreed facts which have not been the subject of critical analysis by the court, it is inappropriate to make orders that would allow for an extended use of findings of fact, particularly use of those facts as prima facie evidence in related proceedings as envisaged by s 83…
His Honour therefore declined to make any orders under s 83.
I am not concerned with questions that arise under s 83 or its current equivalent. However, it seems to me that, generally speaking, statements of agreed facts in the context of criminal proceedings are to be taken to be agreed for the purpose of those proceedings only. They will often involve elements of give and take, both by the Crown and by the accused, in order to reach an agreed position that can be put before the Court in those proceedings. In principle, it seems to me, just as it seemed to Goldberg J in the passage I have mentioned, that where evidence has not been tendered and statements of agreed facts are put before the Court involving elements of compromise, it is inappropriate that they be treated as made for any purpose other than the proceedings in which they were made.
That leaves the exception to which I have referred for a plea of guilty, or admissions made in the course of criminal proceedings that are not limited as being for the purpose only of those proceedings. For example, admissions made by the defendant in the witness box in the course of criminal proceedings would not be taken to be made for the purposes of those proceedings only.
Such admissions and pleas of guilty are, on the authority of Hollington v Hewthorn, admissible against the same defendant in civil proceedings as admissions by that defendant, but it seems clear that in principle their admissibility is limited to proceedings in which the person who made those admissions is a party, as they are admissions by that party. It is not possible to treat a statement by a person who is not a party as an admission by a party, and the exception to the hearsay rule that makes admissions against interest admissible in evidence is founded on the fact that it is an admission by a party to the proceedings in which the admission is tendered. An "admission" by a stranger to proceedings is mere hearsay. A plea of guilty in criminal proceedings or an admission made in the course of criminal proceedings, if tendered in civil proceedings to which that person is not a party, is a mere out of court statement or previous representation and thus mere inadmissible hearsay, subject to a possible exception, to which I shall in due course come, for statements made by a person as to that person's state of mind.
Before I come to that, however, one returns to the rule in Hollington v Hewthorn. That rule was the subject of considerable criticism, essentially on the basis that at least so far as a conviction (as distinct from an acquittal) was concerned, that conviction had to be proved to a high standard - a higher standard than the same matters would have to be proved in civil proceedings - and thus was valuable evidence of the facts of which it spoke. As a result of that criticism, the rule has been reformed by legislation in the United Kingdom, Queensland, South Australia, and ultimately in the Uniform Evidence Acts of 1995. In the United Kingdom, it was amended by the (UK) Civil Evidence Act 1968. In Queensland, (Qld) Evidence Act 1977 provided by s 79: … (2) In any civil proceeding the fact that a person has been convicted by a court of an offence is admissible in evidence for the purpose of proving, where to do so is relevant to any issue in that proceeding, that he committed that offence. (3) In any civil proceeding in which by virtue of this section a person is proved to have been convicted by a court of an offence, that person shall, unless the contrary is proved, be taken to have committed the acts and to have possessed the state of mind (if any) which at law constitute that offence. (4) This section applies- (a) whether or not a person was convicted upon a plea of guilty; and (b) whether or not the person convicted is a party to the civil proceeding."
Under that provision, Mr Williams' conviction would be admissible, because it is not a requirement that the person convicted be a party to the civil proceeding in which it is tendered. In South Australia, however, (SA) Evidence Act 1929 was amended so as to provide (by s 34A): Where a person has been convicted of an offence or found by a court exercising criminal jurisdiction to have committed an offence and the commission of the offence is in issue or relevant to an issue in a civil proceeding, the conviction or finding is evidence of the commission of the offence and admissible in the proceeding against the person or a party claiming through or under the person.
(NT) Evidence Act 1939 was amended to like effect. As will be seen, in distinction to the Queensland provision, the admissibility of the conviction is limited to a proceeding against the person in question or a party claiming through that person. Under that provision, Mr Williams' conviction would be admissible only if he were a party to these proceedings, or if it could be said that the defendants claim through him - a question to which, as will become apparent, I shall have to return.
These issues were addressed by the Australian Law Reform Commission in its "Interim Report: Evidence" (ALRC 26), which culminated in the Evidence Acts of 1995. A part of that report was directed specifically to the rule in Hollington v Hewthorn. The report deals with convictions, acquittals and civil judgments. The result is the regime now to be found in ss 91, 92 and 93 of the (NSW) Evidence Act 1995. Essentially, the Law Reform Commission recommended that convictions should be admissible, but only in proceedings to which the person convicted, or that person's privy, was a party. That recommendation was based on what was thought to be the relatively high probative value of a conviction, but recognised that it was merely evidence and neither conclusive nor gave rise to any presumption of correctness.
As to acquittals, the Commission proposed that they not be admissible, since all they established was that the defendant had raised a reasonable doubt as to the allegation. As to civil judgments, it was recommended that they too not be admissible, because they did not involve the same high degree of proof as a criminal conviction. In that respect, the Commission said, in a passage that was cited by the Full Court of the Federal Court in National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) (2001) 183 ALR 700, [47]: Evidence of Civil Judgments 782. Proposal. It is recommended that a civil judgment not be admissible to prove the facts on which it is based. Its probative weight is considerably less than that of a conviction. It is founded upon the evidence chosen by the parties, who are not obliged to make available all known relevant evidence, as is a Crown Prosecutor. Further, the standard of proof is merely upon balance of probabilities and so there may be little to distinguish a successful or unsuccessful action by a plaintiff. The disadvantages of admitting evidence of a civil judgment (the potential for waste of time and costs in investigating the judgment, and the greater likelihood of challenge to the evidence) outweigh the minimal probative value of the evidence. An exception is made, however, in respect of grants of probate and letters of administration - as is the case in most jurisdictions.
That exception is reflected in Evidence Act, s 92(1).
I am of course not concerned in this case with the admissibility of a civil judgment, but I have referred to that passage because, in the context in which it appears in the Law Reform Commission's report, it makes clear that the intent of s 91 was to address not what are sometimes conventionally, but not entirely accurately, described as judgments - being reasons for judgment or remarks on sentence - but the formal record of a judgment of the Court in a civil proceeding, analogous to the formal conviction or acquittal in a criminal proceeding. Thus what s 91 is addressing is the formal record of conviction, the formal record of acquittal or the formal judgment or order disposing of a case in a civil case. It is not addressing the reasons for judgment, the findings of fact made by a judge in the course of coming to the final conclusion, nor the remarks on sentence, all of which remain no more than the opinion of the judge.
As Hunt AJA explained in the Court of Appeal in Ainsworth v Burden [2005] NSWCA 174, there may be some cases in which, quite apart from establishing the facts found in it, reasons for judgment might be admissible. But s 91 is an exclusionary provision, not a facultative provision. It does not make admissible anything that was not formerly admissible at common law. At least so far as they deal with matters of fact, reasons for judgment and remarks on sentence are inadmissible hearsay or opinion, excluded by the rule in Hollington v Hewthorn and not made admissible by s 91. For that reason, I must respectfully disagree with the views of Button J in R v Jacobs (No 5) [2013] NSWSC 946, [23], where his Honour appears to have held that remarks on sentence are findings of fact admissible to prove facts that were not in issue in the criminal proceedings. The view that reasons for judgment or remarks on sentence are not admissible to prove the facts that they find is supported by the judgment of the Court of Appeal in Prothonotary of the Supreme Court of New South Wales v Livanes [2012] NSWSC 325, [9]-[10].
That then brings me to one of the crucial questions, which is whether Mr Williams' conviction is now made admissible by Evidence Act, s 92(2), which provides as follows: (2) In a civil proceeding, section 91 (1) does not prevent the admission or use of evidence that a party, or a person through or under whom a party claims, has been convicted of an offence, not being a conviction: (a) in respect of which a review or appeal (however described) has been instituted but not finally determined, or (b) that has been quashed or set aside, or (c) in respect of which a pardon has been given.
As Campbell J explained in Gonzales v Claridades, to which I have referred, s 92(2) thus removes the basis for continuing to apply Hollington v Hewthorn in this State in civil proceedings where the person convicted is a party (or a person through or under whom a party claims) and where none of the exceptions in subparagraphs (a) through (c) apply. In enacting s 92(2), Parliament adopted the recommendations of the Law Reform Commission, which in turn deliberately chose to follow the South Australian, rather than the Queensland, model of limiting the admissibility of evidence of a conviction to a proceeding in which the person convicted was a party or a privy of a party. The words used in the section "through or under whom a party claims" directly import the strict concept of privity that applies in the law of res judicata and issue estoppel. In the leading High Court authority on that question, Ramsay v Pigram (1968) 118 CLR 271, Barwick CJ identified the necessary relationship of privity in the context of issue estoppel in these terms: The basic requirement of a privy interest is that the privy must claim under or through the person of whom he is said to be a privy.
The correspondence of the words in that dictum with the terms of the section make very clear that what was intended to be captured was exactly the same concept. I dealt with this concept of privity in an earlier judgment in In the matter of HIH Insurance Limited (in liquidation); De Bortoli Wines (Superannuation) Pty Ltd v McGrath [2014] NSWSC 774, and described it -again by reference to the judgment of Barwick CJ in Ramsay v Pigram - in the following terms at [32]: Privity of interest involves a mutual or successive relationship to the same right. The privy must claim "under or through" the person whose privy he or she is said to be. The concept is illustrated, albeit in the negative, by the judgment of Barwick CJ in Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271 (at 279): Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real 'defendant' to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being, in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him.
It is frankly difficult to conceive of circumstances in which a party to a criminal proceeding will have privies for the purpose of s 92(2). In any event, in this case it cannot be said that in the proceedings against Mr Williams in which he was personally the defendant, he was in any way representing the companies of which he was a director. They had no stake in that proceeding. In the words of Barwick CJ, it cannot be said that the companies of which he was a director were the true defendants to the criminal proceeding. In every respect, the action was between the Crown and Mr Williams personally and was personal to each of them. Mr Williams was not representing the companies. It was in respect of his personal discharge of his duties that he was charged and convicted.
It occurs to me that there are some provisions in the (Cth) Corporations Act 2001 that make a company "and its relevant officer" guilty of certain offences upon certain matters being proved. It may be that in such cases it could be said that there is privity; but even if that is right, which I do not need to decide, this case is not one of them. It cannot be said that the companies of which Mr Williams was a director claim, in any sense relevant to the law of privity, under or in virtue of Mr Williams or of any right of his, or derive any relevant interest through him.
As has been pointed out, to establish privity, the relationship must be such that the supposed privy obtains a benefit or incurs an obligation from the preceding action [see Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 3) [1970] Ch 506, 541; [1969] 3 All ER 897, 912]. The company obtained no benefit and incurred no obligation from the criminal proceedings against Mr Williams. It is not sufficient that the alleged privy is merely concerned - even commercially concerned - in the earlier proceeding, or provided financial backing to the party in them. The privity relationship must be such as to operate to bind the supposed privy to the earlier judgment, whether it has been in favour of or adverse to that party [see Carl Zeiss Stiftung, 541 & 912].
Those requirements are plainly not satisfied in this case. In my view, it cannot be said for the purposes of s 92(2) that Mr Williams is a person through or under whom the defendants (or any of them) claim. Accordingly, s 92(2) does not operate in this case to make Mr Williams' conviction admissible.
I return then to the final potential exception. There is a long and well established exception to the hearsay rule in respect of statements made by a person as to that person's state of mind. On that basis, it might be suggested that a statement by Mr Williams as to his state of mind - namely, his knowledge that the representation in question was misleading - might be admissible.
In Thomas v Connell (1838) 4 M&W 267; [1838] 150 ER 1429, Parke B said: …if a fact be proved aliunde it is clear that a particular person's knowledge of that fact may be proved by his declaration.
In that case, a bankrupt's statement that he knew he was insolvent was held admissible to prove his knowledge of that fact at the time when he made a payment to the defendant. Although the statement was no evidence of the insolvency, it was evidence of his state of mind or his knowledge of the insolvency, if it be otherwise proved.
However, the statements of the bankrupt held admissible in that case were contemporaneous, in the sense that they were made at or about the time of the insolvent transaction. In the report of R v Kay (1887) 16 Cox CC 292, a footnote records that, while in cross-examination, the mother of a woman who had gone through a form of marriage with the accused stated that her daughter had told her since the marriage that she was aware of the misdescription of her name in the bans, in which case the marriage would have been void. That statement was rejected on the ground that it was not evidence. It may have been different, it seems to me, had the statement to her mother been made before the marriage took place, because that would have demonstrated her state of knowledge contemporaneously or at the relevant time, but what was held in that case, in effect, was that a subsequent statement as to a former state of knowledge was not admissible.
It is true that in the celebrated case of Sugden v Lord St Leonards (1876) 1 PD 154, Mellish LJ said (at 251): I think there is a most material distinction, as was pointed out by Lord Campbell in Doe v. Palmer, between declarations made before a will is executed, and declarations made subsequently. The declarations which are made before the will are not, I apprehend, to be taken as evidence of the contents of the will which is subsequently made - they obviously do not prove it; and wherever it is material to prove the state of a person's mind, or what was passing in it, and what were his intentions, there you may prove what he said, because that is the only means by which you can find out what his intentions were.
Again, what his Lordship was there saying was that where the intention of a testator is in issue, evidence of what the testator said before making the will was evidence of his contemporaneous intentions.
It has always been considered that such statements are admissible only if they relate to the maker's contemporaneous state of mind or emotion, so that the statement must be made at or about the time when the relevant event occurred [see, for example, The Queen v Hissey (1973) 6 SASR 280, 294 and Mobil Oil Corporation v Registrar of Trade Marks [1984] VR 25, 27]. Thus, though taken on their own, some of the dicta to which I have referred might suggest that statements by a person as to his knowledge are admissible in exception to the hearsay rule, once it is appreciated that the requirement of contemporaneity applies to them I do not see how that would permit the admission of a statement made some years after the event, in the course of a criminal trial, as evidence in other proceedings that the person in question had that state of mind at the relevant time.
There are very good reasons for the requirement of contemporaneity. Essentially, the basis upon which such statements are admissible in exception of the hearsay rule is that they are spontaneous statements as to what a person has in mind at the time that the statement was made, not as admissions against the interests of a non-party.
In any event, whatever might have been the position at common law, the Evidence Act, by s 66A, makes clear the requirement of contemporaneity.
In those circumstances, it does not seem to me that Mr Williams' plea of guilty can be received in these proceedings as evidence of his state of mind at the much earlier time that is relevant for present purposes.
For all of those reasons, no basis for the admissibility of Mr Williams' plea of guilty, nor of the statement of agreed facts, is established, and I would therefore reject the tender of the judgment in R v Williams.

Judgment 5 - Objection to Expansion of Particulars

Counsel for the defendants has raised an apprehension that the plaintiffs may seek to enlarge their case, at least as to damages, outside the case as pleaded and particularised, and outside the evidence that has so far been served. Counsel for the defendants has not entirely disavowed some proposal to do so, but seeks to minimise it. There is before me at this stage no application or tender that calls for any ruling of the Court, and it is generally undesirable to make such rulings prospectively in terms of generality, rather than specifically when a particular application is put before the Court that enables the issues to be crystallised.
Accordingly, I do not think it is appropriate at this stage simply to say that the plaintiff will or will not be permitted to do what it is apprehended the plaintiff might seek to do, unless and until the plaintiff seeks to do it. In that case, of course, the plaintiff would have to explain why it was doing so at so late a stage, and it may well be constrained in doing so if it were to occasion any irremediable prejudice to the defendant.

Judgment 6 - Objection to Dr Coulton's Report

Paragraph 49 of Dr Coulton's report is as follows: The creation of the Converting Notes Prospectus document as part of the HIH takeover of FAI Limited is dealt with extensively in Volume II Section 14 of the HIHRC report. One of the primary issues was the fact that: a significant collateral transaction was entered into between HIH and SGA the effect of which was not fully understood by the HIH board and was not disclosed in the prospectus (HIHRC, Volume II, page 230). The relevant accounting issue here is that the liabilities of HIH were understated by $35million and shareholders' equity overstated by the same amount.
No one seriously suggests that the first two sentences are admissible, having regard to the approach that the Court has taken to the HIH Royal Commission report and its general inadmissibility in these proceedings. However, the plaintiff presses the third sentence of the paragraph.
In the statement of claim in each proceeding, the following appears: 22. On 26th November 1998 HIH and HIH Holdings (N.Z.) Limited ("HIH NZ") issued a prospectus to raise up to $155million by unsecured converting notes ("the Prospectus"). 23. The Prospectus stated that Societe Generale Australia Ltd ("SGAL"), a co-underwriter to the converting note issue, would take up as a priority allocation the lesser of 30 per cent of the amount to be raised or A$35 million. 24. The Prospectus was misleading in that it did not disclose at that time that HIH and SGAL had entered into a transaction in October 1998 known as the "Total Return Swap" ("TRS") the effect of which was that: 22.1. SGAL's subscription under its priority allocation of converting notes under the Prospectus was fully secured and risk free in that: i. HIH would deposit with SGA a sum equivalent to SGAL's subscription; and ii. SGAL's Subscription would be secured against any loss on re-sale of the converting notes by recourse to this deposit; 22.2. The net amount available to the HIH group of companies pursuant to the Converting Notes issue would not include SGAL's subscription as it was subject to a requirement that HIH deposit a sum equivalent to SGAL's subscription with SGAL; 22.3. It was never intended that SGAL would take up priority allocation the lesser of 30 per cent of the amount to be raised or A$35 million; 22.4. SGAL never did take up a priority allocation the lesser of 30 per cent of the amount to be raised or A$35 million. 23. The statement in the prospectus identified in paragraph 22 above was misleading and deceptive or likely to mislead and deceive in contravention of section 52 of the Trade Practices Act 1972 (Cth) and/or s. 995 and/or s. 999 of the Corporations Law.
The defence denies that HIH issued the prospectus referred to, but otherwise admits paragraph 22; admits paragraph 23; in relation to paragraph 24, including its subparagraphs, admits that HIH entered into the "total return swap" identified in paragraph 24, admits that the prospectus was misleading in that it did not disclose that HIH had done so, and otherwise does not admit that paragraph; and in relation to the second numbered paragraph 23, repeats the response to paragraph 24 and otherwise does not admit the allegations.
The essential question is whether Dr Coulton's statement - that the relevant accounting issue is that the liabilities of HIH were understated by $35 million and the equity overstated by the same amount - can be admitted on the footing that the matter is not in issue because of the pleadings.
In my view, the pleadings establish by admission that the prospectus was misleading in the relevant respect, but the pleading says nothing about the financial statements and the accounting treatment of the $35 million in question. Dr Coulton's report proceeds to make adjustments to the financial statements based on reducing shareholders' equity by $35 million on that account but, as it seems to me, there is no factual basis for that exercise on the evidence as it stands at this stage. The pleadings do not establish that the financial statements (as distinct from the prospectus) failed to make appropriate provision in respect of the $35 million which, as it seems to me, would be a necessary precursor to the calculations undertaken pursuant to the assumption or opinion expressed in paragraph 49.
Accordingly, I reject paragraph 49 of Dr Coulton's report.
Although I had previously indicated that I would admit them - because the objection to them, I thought, was based only on the Morningstar data point - it would seem to follow that paragraphs 51, 52, 54 and 55 should also be rejected. Paragraph 53 goes with them. Paragraph 56 is admitted. Paragraph 57 is rejected. Paragraph 58 is rejected. I am inclined to admit paragraphs 59 through 61; although the summarised balance sheet is adjusted using the Royal Commission adjustments, the summarised balance sheet is of utility and it is easy enough to segregate those adjustments which are not founded on established facts or assumptions.
Paragraph 62, the third sentence to the end is rejected. Paragraphs 63 through 66 are admitted. Paragraph 67 is admitted.
Paragraphs 73 through 76, I am inclined to admit, as it seems to me that they are addressed primarily to the Hanover Reinsurance transactions. To the extent that the evidence does not support what is attributed to the HIH Royal Commission report, it will be of no value, but to the extent that the evidence in this case corresponds with what is extracted from that report, it may be. Essentially, I am treating what is attributed to the Royal Commission report as assumptions which do not prove themselves but will have to be otherwise proved.
In paragraph 73, I would reject the sentence, "Owen J noted ... s 16.3.8." In paragraph 75, I will attribute no significance to the fact that the matter is attributed to Owen J, but the sentence seems to express the author's own opinion by the words "as noted", and I will treat it simply as the author's opinion. Subject to those qualifications, I would admit paragraphs 72 through 76.

Judgment 7 - Objections to Mr Gower's Report

Objection is taken to paragraphs 9 through 17 of Mr Gower's report of 26 February 2015, the subject matter of which is a contention that, for the purposes of calculating return on equity, the operating result for the 12 months to 31 December 1999 has been understated (and that the loss has been overstated) by Dr Coulton, on account of the failure to exclude abnormal items said to total about $100 million.
The abnormal items in question, although I have not at this stage resorted to the accounts to check this, prima facie appear to justify that description, although that will ultimately be a matter for exploration and further evidence if necessary.
The plaintiffs objects to the tender on the basis that, coming when it does, they are deprived of a fair opportunity to respond to it. It is true that this material comes very late in the piece, and involves an adjustment of some potential significance, although as it impacts only on the calculation of ROE, I am not sure that its significance is as great as the plaintiff is presently asserting. The plaintiff submits that it would have affected the negotiation of the statement of agreed facts, but I cannot see how that is so: the statement of agreed facts deals with an amount by which operating profits are said to be overstated, and it makes absolutely no difference to what was agreed, whether that overstatement was before or after extraordinary items.
The plaintiff complains that the matter has not earlier been adverted to, and it is true that the precise items in question have not earlier been pointed to, but the joint experts' report states in paragraph 2(a) - the subject matter of which is Dr Coulton's calculation of ROE as the ratio of reported net profit after tax to market price as stated on the ASX - under Mr Gower's views, "This calculation has no regard for future earnings, expectations or abnormal/non-recurring items included in reported profits". While it is true that that does not identify the two particular abnormal items now raised, there is a plain contention in that document that Dr Coulton's calculation failed to have regard to abnormal items included in the reported calculation of profits.
Finally, the expert evidence has proceeded in this case, as it not uncommonly does, by a progressive refinement of the views of the experts as the reports have been exchanged, the conclave held, and further reports tendered, and further discussions or correspondence had between them or between the solicitors so as to reduce and/or refine the issues. It is regrettable that some of these matters have emerged only at the very last minute, but it seems to me that this is part of the typical ongoing process of refinement by discourse in which the experts more closely look at certain aspects as the issues become somewhat clearer. The plaintiff's objection to the lateness of this issue emerging may have been on firmer grounds had not Dr Coulton's last report been served about two days ago.
I should say that it seems to me hardly controversial that it is usual practice to exclude abnormal and extraordinary items when valuing equity based on the return it generates, and I have already commented that prima facie the two items that have been identified do seem fairly clearly to fall within that territory. It may be that those views can be disturbed by the course of evidence, but it seems to me that least injustice is risked by admitting rather than rejecting this material.
Accordingly, I admit paragraphs 9 through 17 of the report.

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Evidence Act 1939(SA)

Trade Practices Act 1972(Cth)

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