Kirby v Centro Properties Limited [2012] FCA 221 | Case summary | Zoe

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Kirby v Centro Properties Limited [2012] FCA 221 | Case summary | Zoe

[32]

B. RELEVANT PROVISIONS AND AUTHORITIES 4 Section 167 of the Evidence Act is entitled "Requests may be made about certain matters" and provides: A party may make a reasonable request to another party for the purpose of determining a question that relates to: (a) a previous representation; or (b) evidence of a conviction of a person for an offence; or (c) the authenticity, identity or admissibility of a document or thing. 5 We are presently concerned with s 167(a) of the Evidence Act. Section 166(f) of the Evidence Act provides that in Div 1 of Pt 4.6 of the Evidence Act a request means a request that a party makes to another party to "in relation to evidence of a previous representation - to call as a witness the person who made the previous representation". 6 The PwC parties submitted, and I accept, that there are three requirements for a request under s 167(a) - there must be a request, the request must be reasonable and the reasonable request must be made "for the purpose of determining a question that relates to" a previous representation. 7 The phrase "previous representation" is defined in the Dictionary to the Evidence Act to mean: a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced. 8 The word "representation" is also defined in the Dictionary to the Evidence Act. The definition is inclusionary. It includes: (a) an express or implied representation (whether oral or in writing); or (b) a representation to be inferred from conduct; … 9 Unsurprisingly, the scope or reach of the request provisions in relation to "previous representations" is capable of being extensive: Deputy Commissioner of Taxation v Trimcoll Pty Ltd [2005] NSWSC 1324 at [43] and Trimcoll Pty Ltd v Deputy Commissioner of Taxation [2007] NSWCA 307 at [22]-[33]. 10 In determining the application of s 167(a), Basten JA outlined the approach in Trimcoll [2007] NSWCA 307 at [53] and [61]-[62] as follows: To determine the application of s 167(a) it is necessary to identify the representation, express or implied, which might be relevant for the purposes of the proceedings. … It is sufficient for the purposes of ss 166-169 of the Evidence Act that there are previous representations which are likely to be relied on during the trial in order to render a request under s 167 reasonable. It is not necessary to determine the correctness of Trimcoll's submission that no reasonable request could be made of it because its purpose in tendering the documents would be to demonstrate that it made payments because the documents were provided to it, and not based on any fact asserted in them, or at least not any fact in dispute in the proceedings. If it paid money on an invoice, it would appear to have relied upon a representation that certain work had been done pursuant to a contractual obligation requiring that the payment be made. Accordingly, it is not necessary to determine whether a request could be made in relation to a document or representation which was not excluded by the hearsay rule, either before the commencement of the relevant provisions of the Evidence Act, or thereafter. It is unnecessary and inappropriate to define the relevant purposes of the request in any more detail because such requests will usually be made prior to trial and at a time when there may be doubt about the precise nature of the factual matters in issue. Whether the questions identified will clearly arise, may arise or are most unlikely to arise will involve matters of judgment which may go to the reasonableness of the request or of the refusal to comply. (Emphasis added.) 11 Section 169 of the Evidence Act entitled "Failure or refusal to comply with requests" outlines what the Court may do if a party has, without reasonable cause, failed or refused to comply with a request. It provides: (1) If the party has, without reasonable cause, failed or refused to comply with a request, the court may, on application, make one or more of the following orders: (a) an order directing the party to comply with the request; (b) an order that the party produce a specified document or thing, or call as a witness a specified person, as mentioned in section 166; (c) an order that the evidence in relation to which the request was made is not to be admitted in evidence; … (3) The court may, on application, direct that evidence in relation to which a request was made is not to be admitted in evidence if an order made by it under paragraph (1)(a) or (b) is not complied with. (4) Without limiting the circumstances that may constitute reasonable cause for a party to fail to comply with a request, it is reasonable cause to fail to comply with a request if: (a) the document or thing to be produced is not available to the party; or (b) the existence and contents of the document are not in issue in the proceeding in which evidence of the document is proposed to be adduced; or (c) the person to be called as a witness is not available. (5) Without limiting the matters that the court may take into account in relation to the exercise of a power under subsection (1), it is to take into account: (a) the importance in the proceeding of the evidence in relation to which the request was made; and (b) whether there is likely to be a dispute about the matter to which the evidence relates; and (c) whether there is a reasonable doubt as to the authenticity or accuracy of the evidence that is, or the document the contents of which are, sought to be proved; and (d) whether there is a reasonable doubt as to the authenticity of the document or thing that is sought to be tendered; and (e) if the request relates to evidence of a previous representation - whether there is a reasonable doubt as to the accuracy of the representation or of the evidence on which it was based; and (f) in the case of a request referred to in paragraph (g) of the definition of request in section 166--whether another person is available to give evidence about the conviction or the facts that were in issue in the proceeding in which the conviction was obtained; and (g) whether compliance with the request would involve undue expense or delay or would not be reasonably practicable; and (h) the nature of the proceeding. (Emphasis added.) 12 Section 192A entitled "Advance rulings and findings" is also relevant. It provides that: Where a question arises in any proceedings, being a question about: (a) the admissibility or use of evidence proposed to be adduced; or (b) the operation of a provision of this Act or another law in relation to evidence proposed to be adduced; or (c) the giving of leave, permission or direction under section 192; the court may, if it considers it to be appropriate to do so, give a ruling or make a finding in relation to the question before the evidence is adduced in the proceedings. There is no dispute that the Court is entitled to consider the applicants' requests before the PwC parties seek to adduce the evidence in the proceedings.

[37]

Paragraphs 134 and 135 of the Cougle Affidavit 22 Paragraphs 134 and 135 depose to a conversation or conversations between Mr Cougle and Mr Brad Duggan. For the audit of "Centro Properties Group" (CNP) and its subsidiaries including "Centro Retail Group" (CER) (the 2007 Audit), it is not in dispute that Mr Cougle was the "Engagement Partner" for what are described as "Listed Entities (including all reporting entities in the Centro Properties Group structure)" and Mr Duggan was the "Manager, Listed Entities / Wholesale Funds". 23 The first task is to identify the representations, express or implied (if any), in the identified passages which might be relevant for the purposes of the proceedings: see [10] above. In that context, it is important to recall the hearsay rule. Section 59(1) of the Evidence Act identifies the rule as follows: Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation. That rule does not apply "to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of an asserted fact": s 60 of the Evidence Act. 24 In assessing whether there are implied representations, it is important to recall that it is only necessary for the Court to be satisfied that the representation or representations might be relevant for the purposes of the proceedings: see [10] above. Assessment of whether identified representations will clearly arise, may arise or are most unlikely to arise involves matters of judgment which may go to the reasonableness of the request or of the refusal to comply. Those questions are not relevant to the threshold issue of identifying the representations. 25 The first question is relevance. Evidence is made relevant under s 55 of the Evidence Act. The question which arises is whether the disputed evidence rationally affects (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. 26 In their submissions, the PwC parties described the issue as follows: The applicants allege that PwC / PwCS made a number of oral and written representations which the applicants say were misleading and deceptive. PwC / PwCS defend the claim, inter alia, on the basis that (a) the representations were statements of opinion of the relevant PwC partner (Cougle in the case of PwC and Grouios in the case of PwCS) and (b) the opinions were genuinely held and there were reasonable grounds for each opinion. 27 So much is made clear by PwC's defence filed in VID 326 of 2008. For example, in answer to the plea in paragraph [110] of the Fifth Further Amended Statement of Claim that PwC made identified representations to the Centro Board Audit and Risk Management Committee (BARC) and the other directors of CNP on or about 5 September 2007, PwC's defence states at [48]: (b) … that any representations made by Mr Cougle on or about 5 September 2007, whether expressly or impliedly, were a statement of opinion and Mr Cougle had reasonable grounds for such opinions by reason of the audit planning and procedures undertaken under his supervision, the work done by Mr Cougle and his knowledge of the work done by audit staff in respect of the audit prior to 5 September 2007, the inquiries which he had made of and the information and explanations provided to him by CNP and its directors, officers and employees, and the inquiries which Mr Cougle had made of audit staff, including regarding the inquiries which audit staff had made of, and information and explanations provided to them by, CNP and its directors, officers and employees; (Emphasis added.) 28 Particulars are then provided in relation to the matters said to give rise the reasonable grounds and include: (i) the audit planning and audit work undertaken by Mr Cougle and audit staff (including staff from PwC's Accounting Consulting Services function); … (iii) in August 2007, CNP had represented to one of the audit staff, Mr Duggan, that the Centro Group's debt (other than the JP Morgan facility) was non-current and would roll over under existing facilities; (iv) further and in the alternative, … on or about 28 August 2007, Mr Cougle had a discussion with at least Mr Duggan as to whether liabilities of the Centro Group (other than any liability in relation to the JP Morgan facility) were current and was advised by Mr Duggan that such liabilities did not require reclassification; … (vi) Mr Cougle was entitled to believe and did believe that the information provided to him and to audit staff by CNP (including the representations particularised above) was not false or misleading in a material particular and did not omit any matter or thing the omission of which rendered that information misleading in a material respect. 29 Much of the focus of the PwC parties' submissions was directed at persuading the Court that there was no evidentiary dispute that the representations were made. That is, the PwC parties pointed to the fact that none of the applicants adduced evidence on this application or in preparation for trial which raises any doubt as to whether the previous representations were made, in this case, to Mr Cougle (and to Mr Grouios in respect of later passages). By way of example, the PwC parties submitted that the representation in paragraph 141 of the Cougle Affidavit which states that Mr Duggan told Mr Cougle something along the lines "They are okay, Cougs" (see Attachment B below) is relied upon by the Kirby Applicants in a Consolidated List of Admissions which the Kirby Applicants provided to the Court as part of their opening. I reject the PwC parties' submission that the "true purpose of the request appears to be a collateral one …". The question to be asked and answered is what is the purpose of the PwC parties seeking to lead the evidence in dispute? As is apparent, evidence is often led for more than one purpose. Once evidence is tendered however it is in for all purposes (subject to a limitation order under s 136 of the Evidence Act): Hughes v National Trustees, Executors and Agency Company Limited (1978) 143 CLR 134 at 153. 30 In the present application, the PwC parties submitted that they do not and will not rely upon the disputed passages to prove any fact other than that Mr Cougle was told certain things by Mr Duggan. That statement is important. In particular, Senior Counsel for the PwC parties submitted that the PwC parties do not and will not rely upon the disputed passages as evidence of the fact that: 1. the audit was conducted; 2. the audit was being conducted in a particular manner; and 3. particular people had particular roles in the conduct of the audit. 31 That is, the PwC parties submitted that they do not and will not rely upon the disputed passages to prove any fact other than that Mr Cougle was told certain things by Mr Duggan. 32 Given the views I have formed, it is unnecessary to resolve the question whether s 167 of the Evidence Act is limited to hearsay evidence which is admissible under an exception in the Evidence Act: Trimcoll [2007] NSWCA 307 at [61]; cf Lewis v Nortex at [4]. 33 Because the PwC parties have taken the course described, it is not necessary to decide whether the request made under s 166 is reasonable and if so, what orders the Court should make in response to the request. It is not necessary to do so because the disputed evidence that they have sought to lead is not being led for any hearsay purpose.

[38]

Paragraphs 139 and 140 of the Cougle Affidavit 34 Paragraphs 139 and 140 depose to a conversation or conversations between Mr Cougle and Mr Peter Fekete about what has been described as the "reclassification issue". Again, it is not in dispute that for the 2007 Audit Mr Fekete was the "Engagement Partner" for "CMCS Syndicates, Wholesale Funds and Direct Property Funds". 35 The reclassification issue involves, inter alia, whether a bridging facility provided by JP Morgan Australia Pty Ltd to CNP on 5 April 2007 (the JPM Domestic Bridge) was improperly classified as non-current (rather than current) debt in the Appendix 4E Preliminary Final Report for the financial year end 30 June 2007 lodged by CNP with the Australian Stock Exchange (ASX) on 9 August 2007 (CNP Preliminary Final Report). The JPM Domestic Bridge was approximately USD1,863,400,000. Unsurprisingly, the reclassification issue (including PwC's obligations under s 311 of the Corporations Act 2001 (Cth) (the Corporations Act) and further or alternatively, its involvement in the alleged contravention of ASX Listing Rule 4.3D) is a central issue in the proceedings. Its centrality not only relates to the content of CNP's accounts (the CNP Preliminary Final Report, the CNP Concise Financial Report contained in CNP's 2007 Annual Report lodged with the ASX on 18 September 2007 and CNP's continuous disclosure obligations) but also PwC's conduct both before and after the discovery of the issue of the reclassification of the JPM Domestic Bridge. 36 Again, for present purposes, the first task is to identify the representations, express or implied (if any), contained within those paragraphs which might be relevant for the purposes of the proceedings. In my view, at least the same three implied representations are contained in these paragraphs, namely, that: 1. the audit was conducted; 2. the audit was being conducted in a particular manner; and 3. particular people had particular roles in the conduct of the audit. 37 For the reasons set out above (see [25]-[29]), in the present case, I am satisfied that the representations identified, at the very least, might be relevant for the purposes of the proceedings. However, as noted above, the PwC parties accept that they do not and will not rely upon the disputed passages for those purposes.

[40]

2nd and 3rd sentences of paragraph 53 of the Grouios Affidavit 39 The second and third sentences of paragraph 53 depose to a conversation between Mr Grouios and Mr Andrew Cronin about the "CER Review". 40 In the Grouios Affidavit, Mr Grouios deposes that at the relevant time he was an authorised representative of PwCS which holds an Australian Financial Services Licence allowing PwCS to provide financial product advice under Corporations Act. 41 Mr Grouios further explains that in about June 2007, he became aware of a proposed transaction involving CER and Centro Shopping America Trust (CSF). Mr Grouios describes the steps of the proposed transaction as follows at [18] of the Grouios Affidavit: … CSF would acquire certain assets from CNP in consideration for the issue of CSF securities to CNP and the assumption of certain debt by CSF and all of the issued units in the CSF would then be acquired by CER in consideration for the issue by CER to CSF security holders of units in CER (Proposed Merger). The proposed merged entity was commonly referred to as "New CER". This transaction became known as "Project Sky". 42 The affidavit then deposes to the retainer of PwCS by CER on 13 August 2007 with the scope of the retainer including: 1. a "due diligence review" of the forecast distributions of New CER for the 2008 financial year (New CER Forecast Distributions) and the pro-forma balance sheet of New CER (New CER Pro Forma) as at 30 June 2007 (CER Review); and 2. preparation of an investigating accountant's report (PDS IAR). It is common ground that PwCS did both. The issues in dispute include the quality of that work. That issue (the quality of PwCS' work) is said by the applicants to be significant for both the issue of the PDS IAR as well as PwC's audit of the Centro entities. 43 Again, the first task is to identify the representations, express or implied (if any), contained within those identified sentences in paragraph 53 which might be relevant for the purposes of the proceedings. In my view, a number of implied representations are contained in these paragraphs, including that: 1. the CER Review was conducted; 2. the CER Review was being conducted in a particular manner; 3. particular people had particular roles in the conduct of the review; 4. PwCS was involved in the review; and 5. the CER Review was using or at the very least, had resort to, the 2007 Audit and / or the PwC personnel working on the 2007 Audit. 44 In assessing those implied representations, it is again important to recall that it is only necessary for the Court to be satisfied that the representations might be relevant for the purposes of the proceedings. Assessment of whether the representations identified will clearly arise, may arise or are most unlikely to arise involves matters of judgment which may go to the reasonableness of the request or of the refusal to comply. Those questions are not relevant to the threshold issue of identifying the representations. 45 In the present case, I am satisfied that the representations identified, at the very least, might be relevant for the purposes of the proceedings. So much is made clear by PwCS' defence in VID 1028 of 2010. By way of example, one of the principal allegations in VID 1028 of 2010 is that the "Negative Assurance Statement" in the IAR was misleading or deceptive. The phrase "Negative Assurance Statement" is defined in the Further Amended Statement of Claim (at [16]) to mean the statement by PwCS that: "nothing had come to the attention of PWCS which caused PWCS to believe that the Pro-forma Balance Sheet was not prepared consistently with the Accounting Policies, by using key accounting policies including proper classification of borrowings and were presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards, and the Accounting Policies …" 46 PwCS' defence to that plea is important. The defence contains a number of elements. One element is the statement that the Negative Assurance Statement was a statement of fact and was true, or, alternatively, the Negative Assurance Statement was a statement of opinion and PwCS had reasonable grounds for that opinion. The particulars provided in support of that plea were as follows: PwCS had reasonable grounds for that opinion by reason of: (i) the planning and procedures undertaken in performing the PwCS Retainer under the supervision of Mr Grouios; (ii) the verification by CER (by its Corporate Finance Manager, Mr Chris Meehan) of the CER pro forma consolidated balance sheet contained in the CER PDS; (iii) the fact that the debt of CER would be, and was, classified as non-current in CER's accounts for the year ended 30 June 2007 and that an audit of such accounts involved a higher level of review than the review required under AUS 902 "Review of Financial Reports"; and (iv) the inquiries which PwCS had made of, and information and explanations provided to it by, CER and its directors, officers and employees. (Emphasis added.) 47 PwCS admits, inter alia, that Mr Cronin: 1. was a person who was employed by PwCS; 2. assisted Mr Grouios in relation to the CER Review (to the extent of 157.5 hours of billed time), was involved in co-ordinating PwCS procedures and was present at some of the Due Diligence Committee Meetings that formed part of the CER Review; 3. from time to time communicated with Messrs Grouios, Fekete, Duggan and McKenna in respect of the CER Review; and 4. was engaged in relation to the audit of CNP's and CER's financial reports for the year ended 30 June 2007 under the supervision of Mr Cougle and spent large periods of time on a daily basis at the premises of CNP and CER. This list is by no means exhaustive. 48 The evidence of what was said to Mr Grouios (that is, the statement of what he was told) was relevant if and only if he was told it in connection with the CER Review. 49 Given the current state of the proceedings (including the pleadings and the evidence filed by the PwC parties), it is both unnecessary and inappropriate to define the relevant purposes of the request in any more detail. As I have already noted, whether the implied representations are relevant is a matter that I cannot and need not determine at this stage. It is sufficient, as I have found, that the implied representations might be relevant for the purposes of the proceedings. However, as noted above, the PwC parties accept that they do not and will not rely upon the disputed passages for those purposes. That being so, it follows that the disputed passages of evidence are not tendered as evidence of the fact that the Negative Assurance Statement was true or as evidence of the fact that what was said by Mr Cronin was true. They are tendered to prove the fact of the conversation (a matters said to be relevant to the grounds on which an opinion was expressed) and that is all.

[41]

3rd sentence of paragraph 60 of the Grouios Affidavit 50 The third sentence of paragraph 60 appears under the heading "Provision of financial models by CER to PwCS". That section of Mr Grouios' Affidavit is concerned with what has been described as the "Project Sky model". Mr Grouios explains in his affidavit (at [59]) that the model included: 1. the CER and CSF base cases which contained forecast distributable income statements for the years ending 30 June 2008, 30 June 2009 and 30 June 2010 and balance sheets as at 30 June 2007 for both of the separate entities; 2. forecast distributable income statement and balance sheet in relation to CNP's Australasian and US property assets which were to be transferred to CSF (and ultimately to New CER) as part of the Proposed Merger; 3. the proposed New CER Pro Forma; 4. the New CER Forecast Distributions; and 5. details of the merger adjustments. 51 Mr Grouios then deposes to having reviewed subsequent versions of the Project Sky model to identify whether there were any significant changes from previous versions and to check that the model was consistent with his understanding of the transaction and the assets that were being transferred as part of it. 52 The critical sentence the subject of this application states: I would typically discuss the changes with Mr Cronin to see whether he, or the Review team, considered that any issues arose as a result of changes made. 53 Again, the first task is to identify the representations, express or implied (if any), contained within that sentence in paragraph 60 which might be relevant for the purposes of the proceedings. In my view, at least the same implied representations identified at [43] above are contained in these paragraphs. For the reasons set out above (see [44]-[49]), in the present case, I am satisfied that the representations identified, at the very least, might be relevant for the purposes of the proceedings. Again, the PwC parties accept that they do not and will not rely upon the disputed passages for those purposes.

[48]

WHERE TO NEXT? 67 As the above analysis demonstrates, the previous representations might be relevant for the purposes of the proceedings. However, as also noted, the PwC parties submitted that they do not and will not rely upon any of the disputed passages for the purpose of proving the truth of any of the implied representations. In particular, the PwC parties will not seek to rely upon the disputed passages to prove any fact other than that Mr Cougle or Mr Grouios was told certain things. 68 Because the disputed evidence might be understood as conveying implied representations (upon which the PwC parties expressly disavow any reliance) it is important to consider whether a limitation order under s 136 can be framed. The Kirby Applicants submitted that no order under s 136 could be framed to sufficiently overcome the disadvantages inherent in the applicants not having the opportunity to test the evidence sought to be adduced by the PwC parties. I reject that submission. For the reasons that follow, it is possible to frame an order under s 136 which meets those disadvantages. 69 In Roach, the s 136 limitation was described in the following terms: … [I]nsofar as the document contained representations of fact and expressions of opinion, they would not be used as evidence of the truth of facts stated in them or as evidence of facts about the existence of which opinions were stated in them. 70 In Hamod, the order was described as follows: The second defendant had objected to the tender of those documents. At the point of their admission the second defendant sought in the alternative an order pursuant to s 136 of the Evidence Act 1995 limiting the use that could be made of them. The precise terms of that limitation were described as the "usual document limitation", which was defined to mean that a document so limited should be admitted only as evidence of the contents of a communication in the form of that document between the named author or authors of the document and the addressee or addressees of the document, and not as evidence of the truth of its contents (including not as evidence of any earlier communication to which the document may have referred). … (Emphasis added.) 71 Of course, the present application is concerned with oral evidence, not documents. However, the "unfair prejudice" principles conveniently summarised by Sterling J in Roach at [74], with appropriate adaption, are applicable. The principles were as follows: Having regard to the terms and context of ss 135, 136 and 137 and the case law to which I have referred, I set out my view of considerations relevant to "unfair prejudice" as follows. (a) To say that any prejudice must be unfair prejudice is to state the obvious. (b) The phrase "unfair prejudice" is not defined. The legislature imposed no restriction on the criteria for unfairness. (c) The exceptions to the hearsay rule evince a legislative intention to allow evidence notwithstanding its hearsay character. But ss 135, 136 and 137 evince a legislative intention to allow any evidence, otherwise admissible, to be rejected or its use to be limited if the conditions specified in those sections are met. (d) Where hearsay evidence is made admissible by an exception to the hearsay rule it would be wrong to exclude it or to limit its use merely because it is hearsay and therefore of inherently less reliable quality. That would be to frustrate the intention of the legislature in making hearsay evidence admissible where it is covered by an exception to the hearsay rule. But that is not the same as saying that there is scope for the application of ss 135, 136 and 137 in relation to hearsay evidence which is covered by such a statutory exception but where there is some additional factor, for example, where the maker of the representation is not to be called. (e) Inability to test the truth of the representation is a legitimate ground for rejecting or limiting the use of evidence which is covered by an exception to the hearsay rule. Thus, whether the maker of the representation will be called as a witness is a relevant consideration. (f) However, where hearsay evidence is admissible under an exception to the hearsay rule because of the unavailability of the maker of the representation, there is a special reason for not disallowing the evidence or limiting its use on the ground that the evidence cannot be tested by cross-examination. That is because the legislature has made the evidence admissible notwithstanding that consideration. (g) Conversely, where the maker of the representation is available or is not shown to be unavailable and the party tendering the evidence does not call the person, that is a legitimate consideration in favour of a finding of unfair prejudice. (h) Sections 60 and 77 give rise to special considerations. Unlike other exceptions to the hearsay rule and the opinion rule, it is not the objective of those sections to facilitate proof. They are there to avoid a distinction having to be made about evidence being used for one purpose and not for another. Where a document goes into evidence because the existence of the document is a relevant fact, the operation of these sections without a limiting order under s 136 may have a consequence which the legislature cannot have intended. Any representation in the document which is probative of some other element in the tendering party's case becomes evidence of the content of the representation. Representations of fact become evidence of the truth of the representation, irrespective of whether they are first-hand or remote hearsay and irrespective of whether the source of the information is disclosed. Representations of expert opinion in the document are probative of whatever is the subject of the opinion expressed, irrespective of whether the author of the document is qualified to express the opinion and irrespective of whether the assumptions made for the purpose of expressing the opinion are specified. Such consequences cannot have been intended where the opposite party is disadvantaged by such consequences. Section 136 serves to avoid such unfairness. (i) Where ss 60 or 77 operate and the author of the document is not called, the truth of facts stated or the efficacy of the opinion expressed cannot be tested by cross-examination. The consequence of the operation of ss 60 or 77 is then potentially the more unfair on that account. (j) The operation of s60 on assumption evidence which is given as the basis for an expert opinion is also a special case. Where such evidence is in the form of a bare statement of facts or where facts are stated as having been provided by some other person or persons, s60 operates to make the account evidence of the truth of the facts so stated. That is not so if the expert says that certain facts are assumed for the purpose of providing the opinion. A disadvantage should not be incurred in legal proceedings by happenstance. If the facts stated are contentious, it will ordinarily be unfair that the opposite party is fixed with assumption evidence as evidence of the truth of the facts stated by reason of those facts having been stated in one form rather than the other. 72 It was common ground that in the absence of a s 136 limitation order, if the PwC parties were permitted to use the evidence for the hearsay purposes identified above, the prejudice to the applicants would be an unfair prejudice fully justifying the Court making the s 136(a) order which the parties sought the Court to make. So much was expressly conceded by Senior Counsel for the PwC parties. The question which then arises is what is the appropriate order and what are the consequences of making such an order. 73 First, the form. Less is more. In my view, the order should state the purpose for which the evidence is being adduced. An order in the following terms achieves that objective: Pursuant to s 136(a) of the Evidence Act 1995 (Cth), the evidence of the previous representations contained in: a. paragraphs 53, 60, 72, 74, 99, 101, 127, 131 and 143 of the Affidavit of John Grouios sworn on 21 December 2011; and b. paragraphs 134, 135, 139, 140 and 141 of the affidavit of Stephen John Cougle sworn on 22 December 2011, are admissible only as evidence of the fact that the previous representations set out in those paragraphs were made and for no other purpose. 74 What follows is that the evidence is not admissible for any other purpose. If the PwC parties wish to rely upon that evidence for any other purpose, they will need to make the necessary application with all of the attendant consequences.

[51]

(b) an order pursuant to s 169(l)(a) … directing PwCS to comply with any or all of the requests identified in Schedule B … (PwCS Requests); Schedule B What was the content: of the briefings and discussions concerning the status of the work referred to in the 2nd and 3rd sentences of paragraph 53 of the [Grouios Affidavit] Mr Andrew Cronin What was the content of the discussions concerning changes made to the Project Sky Model referred to in the 3rd sentence of paragraph 60 of the Grouios Affidavit? Mr Andrew Cronin The member/s of the "Review Team" alleged to have made representations to Mr Cronin, which were subsequently communicated by Mr Cronin to Mr Grouios as referred to in the 3rd sentence of paragraph 60 of the Grouios Affidavit. What was the nature of the work allegedly still to be done as at 22 August 2007 on the CER audit as represented to Mr Grouios, referred to in the 3rd sentence of paragraph 72 of the Grouios Affidavit? Mr Andrew Cronin What was the content of the consultations between Mr Cronin and ACS as represented to Mr Grouios referred to in the 2nd sentence of paragraph 74 of the Grouios Affidavit? Mr Andrew Cronin The member/s of ACS alleged to have made representations to Mr Cronin and ACE was satisfied there was joint control Super LLC, which representations were subsequently communicated by Mr Cronin to Mr Grouios as referred to in the 2nd sentence of paragraph 74 of the Grouios Affidavit Whether the events at the meeting described in the last sentence of paragraph 99 of the Grouios Affidavit were as represented by Mr Cronin to Mr Grouios? Mr Andrew Cronin Whether the alleged instruction given by Mr Grouios to Mr Cronin on 11 September 2007 was given, and its content, as referred to in the last sentence of paragraph 127 of the Grouios Affidavit? Mr Andrew Cronin What were the steps taken by Mr Cronin and/or others prior to allegedly representing to Mr Grouios on 12 September 2007 that there were no issues arising out of subsequent events, as referred to in the 2nd sentence of paragraph 131 of the Grouios Affidavit? Mr Andrew Cronin What was the content of the discussions between Mr Fekete and CER management, which were the subject of the discussions between Mr Fekete and Mr Grouios on 4 October 2007, as referred to in the 4th sentence of paragraph 143 of the Grouios Affidavit? Mr Peter Fekete

[52]

(c) further, or in the alternative to (a), an order pursuant to s 169(1)(b) … directing PWC to call any of all of the persons identified in Schedule C …; Schedule C Mr Gareth Winter Mr Brad Duggan Mr Peter Fekete (d) further, or in the alternative to (b), an order pursuant to s 169(l)(b) … directing PWCS to call any of all of the persons identified in Schedule D …; Schedule D Mr Andrew Cronin Mr Peter Fekete (e) in the alternative to (a) and (c), an order pursuant to s 169(1)(c) and/or a ruling pursuant to s 192A … that by reason of the failure to comply with the requests made by the applicants (and/or by reason of the exercise of a discretion pursuant to s 135 …) the evidence in relation to any or all of the PWC Requests (as specified in Schedule E …) not be admitted in evidence; Schedule E The 6th Sentence of paragraph 38 of the [Cougle Affidavit] Paragraphs 134 and 135 of the Cougle Affidavit Paragraphs 139 and 140 of the Cougle Affidavit Paragraph 141 of the Cougle Affidavit (f) in the alternative to (b) and (d), an order pursuant to s 169(1)(c) and/or a ruling pursuant to s 192A … that by reason of the failure to comply with the requests made by the applicants (and/or by reason of the exercise of a discretion pursuant to s 135 …) the evidence in relation to any or all of the PWCS Requests (as specified in Schedule F …) not be admitted in evidence. Schedule F Paragraph 53 of the [Grouios Affidavit] 3rd sentence of paragraph 60 of the Grouios Affidavit Paragraph 72 of the Grouios Affidavit Paragraph 74 of the Grouios Affidavit Last sentence of paragraph 99 of the Grouios Affidavit Last sentence of paragraph 127of the Grouios Affidavit Second sentence of paragraphs 131 of the Grouios Affidavit Paragraph 143 of the Grouios Affidavit ATTACHMENT B Para Text Vlachos Applicants' Request Cougle Affidavit sworn 22 December 2011 38 Another partner of the Firm, Peter Fekete, was the auditor of certain other unlisted entities connected with the Centro Group, including the Centro MCS syndicates and Centro wholesale funds (the "Unlisted Entities"). Along with personnel from PwC in Australia, personnel from PricewaterhouseCoopers LLP in the US assisted with this work. Peter Fekete had been the auditor of CEP until 2002 and PRX until 2003. The most senior employee on the audit team for the Unlisted Entities was Gareth Winter. Gareth had commenced work in relation to the Centro Group in 2000. In 2007, Gareth was a director until he was admitted to the PwC partnership on 1 July 2007. During the course of 2006 and 2007, I had discussions with Gareth [Winter] about matters relevant to the Half Year Reviews and Audits, including in relation to the issues of control and equity accounting referred to in paragraphs 143 to 154 of this affidavit. Gareth's staff assessment ratings from 2003 were: Fiscal 2003 "2"; Fiscal 2004 "2"; Fiscal 2005 "2"; Fiscal 2006 "3"; and Fiscal 2007 "2". in my work with Gareth, he impressed me as being technically outstanding and as having a well developed understanding of the Centro Group business model. 134 On 28 August 2007, I was working with members of the audit team in a meeting room at the Centro Group's premises. We were reviewing a document entitled "Summary of Unadjusted Differences" ("SUD"). A copy of this document is at (PWC.004.001.4437). ln our discussions, Brad Duggan said words to the following effect: Bold passage "Adjustment 12 is an interest bearing borrowing in relation to a JP Morgan facility which should be reclassified as current. It's bridging finance due to mature in December 2007. I've told Belch about this but it seems the company hasn't made a decision on it yet." 135 It is possible that Brad mentioned this to me on an earlier occasion as one of the matters which was being addressed by the Centro Group. Adjustment number 12 on the SUD refers to the reclassification of that borrowing and I made the annotation "ADJUST" next to that item as a result of the comment Brad Duggan made to me and set out in the preceding paragraph. Bold passage 139 Following the discussions with Brad Duggan referred to in the preceding paragraph, I had a discussion with Peter Fekete in which I discussed the reclassification issue and Peter Fekete said words to the following effect: Fekete: "I've got a client at the moment which is also in the situation having changed the classification of an item between the 4E and the financial statements. I will get someone to get you a copy of the disclosure that client will be using." 140 After those discussions, I was provided with some suggested wording that I understood another of Peter Fekete's clients was using. A copy of that wording is at (PWC.004.001.7509) on which I had written "Brad, Example of wording we want in A/Cs SJC". I expected Brad Duggan to speak to Paul Belcher about including some wording in CNP's accounts along the lines of the disclosure set out in that document and I understood that this occurred. 141 During the discussions with the audit team on 28 August 2007, I had a discussion with Brad Duggan during which words to the following effect were spoken: Bold passage Cougle: "What about the classification of the rest of the facilities?" Duggan: "They are okay, Cougs. This amount is bridging finance for the New Plan acquisition and is different from other financing arrangements where the Centro Group has funding under long-term facility agreements." Grouios Affidavit sworn 21 December 2011 53 I met with Mr Cronin regularly during the course of the CER Review to discuss matters arising from the review. Mr Cronin briefed me on the status of the work and usually provided me with a document which summarised issues which had arisen in the course of the review work and their current status. From these discussions and documents I received I was satisfied that the Review team was following appropriate procedures. Bold passage 60 I reviewed subsequent versions of the Project Sky model as and when they were provided to me in order to identify whether there were any significant changes from previous versions and to check that the model was consistent with my understanding of the transaction and the assets that were being transferred as part of it. I recall that most of the changes to the model arose because there were changes to the assets that were to be transferred as part of the Proposed Merger and some changes to the assumptions relating to the consideration payable for those assets, interest rates and exchange rates. I would typically discuss the changes with Mr Cronin to see whether he, or the Review team, considered that any issues arose as a result of changes made. 72 On or around 22 August 2007, after reading the BARC Report I asked Mr Cronin if there were any issues relevant to the CER audit of which I should be aware that were not covered in the BARC Report. Mr Cronin responded with words to the effect: "No, there aren't any other major issues, it has basically been a clean audit." Mr Cronin informed me at that time that the audit work was substantially complete but there was still same work to do on the presentation of the financial statements. Bold passage 74 I was aware from my review of the BARC Report that CER had accounted for its interest in Super LLC on an equity accounting basis for the year ended 30 June 2007. Mr Cronin also informed me that the Accounting Consulting Services Group ("ACS") within PwC, which I knew to be a group within PwC which provides specialist technical advice on accounting and audit issues, had been consulted regarding the existing arrangements for the purposes of the Centro Audit and were satisfied that there was joint control. 99 Mr Cronin came into the room and Mr Duggan and Mr Cronin had a conversation in words to the following effect: Entire paragraph Duggan "How did the meeting go?" Cronin: "Yeah fine." Duggan: "How did the restatement go down?" Cronin: "It was raised in the meeting and the directors didn't even discuss it." 100 I understood from this exchange that Mr Cronin had attended a meeting with at least some of the directors of one of the Centro entities at which some kind of accounting restatement issue had been raised. I was concerned at this point to understand whether the issue would have an impact on the CER base case for the New CER Pro Forma. Bold passage 101 I then had a conversation with Mr Cronin and Mr Duggan to the following effect Bold passages Grouios: "What restatement?" Cronin: "They misclassified $1.1 billion of debt in the 4E but we picked it up as part of the audit and it's been corrected in the stat accounts". Grouios: "What do you mean?" Cronin: "They showed it as non-current and it should have been classified as current. The numbers don't change overall. It's only the classification and it doesn't affect CER as it only relates to Centro Holdings. By "Centro Holdings" I understood Mr Cronin to mean CNP, as CNP was commonly referred to as "Centro Holdings" or "Centro" by those working on the CER Review and Centro Audit. Grouios: "How did they get that wrong?" Cronin: "It was a bridging facility that Centro Holdings took out that should have been classified as current instead of non current." Grouios: "Are there any similar facilities with CER?" Cronin: "No, CER doesn't have any bridging facilities". Duggan: "Yeah, that's right, it relates to a JP Morgan facility that was used to fund Centro Holdings' investment in New Plan, but we have done some further work on the audit to make sure that we have picked up all the current debt." Cronin: "But the change to the accounts only relates to Centro Holdings. There is no change to the CER accounts." 102 While I was initially surprised by what Mr Cronin had told me, as a result of Mr Cronin's and Mr Duggan's comments I was satisfied that the audit of CNP had picked up the issue and that the audit team had done extra work to ensure that there was no problem with the classification of interest bearing liabilities in CER's accounts. Bold passages 127 It is my usual practice in performing Investigating Accountant's engagements to instruct my staff that the final signed Investigating Accountant's report cannot be released for inclusion in the public disclosure documents until those documents have been approved by the due diligence committee. Based upon that usual practice, I believe that at about the same time that I sent the email to Mr Cronin I separately instructed him to hold those documents and to release them to CER and CSF only following confirmation of final approval of the disclosure documents by the DDCs the following day. 131 On or about 12 September 2007 I asked Mr Cronin to check whether there had been any events following finalisation of the audited financial statements of CER which might impact on the financial information in the CER PDS. I said to Mr Cronin words the effect, "were there any issues arising out of subsequent events?" to which Mr Cronin answered, "no". At [PWS.001.001.0313] is a file note which appears on the files of PwCS in relation to Project Sky titled "Subsequent Events - Project Sky" and dated 12 September 2007 which appears to be written and initialled by Mr Cronin. I recognise Mr Cronin's writing from other documents which I have seen which I know were written by him. 143 On 4 October 2007 1 received an email from Mr Meehan [CER.026.026.0002] attaching a release made by CER to ASX dated 4 October 2007 [CER.026.026.0003]. I recall reading that email soon after I received it. I recall that at the time I read it I was disappointed that CER had made significant changes to the transaction after the CER EM and CER PDS containing the PDS IAR had been released, without consulting me. I discussed this matter with Mr Fekete on 5 October 2007 and he informed me that he had spoken to CER management to discuss the issue. I was content that the changes were to slightly increase the forecast distributions of New CER due to lower expected costs and that there was no need to revise the PDS IAR as a result. I was not asked by anyone at CER to do any further work in relation to this change to the transaction.