Lewis v Nortex Pty Ltd

Supreme Court of NSW|2002-11-14|Before: Hamilton J, Kation P, Lamru P, Nortex P, Cohen J, Einstein J, Giles CJ

CITATION : Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1083 revised - 10/12/2002 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3081/97; 1750/02 HEARING DATE(S) : 14 November 2002 JUDGMENT DATE : 14 November 2002

3081/97 Peter Lawrence Lewis (P) Lamru Pty Ltd (Applicant) Kation Pty Ltd (Respondent) Brian Raymond Silvia (Liquidator) PARTIES : 1750/02 Lamru Pty Limited (P) Kation Pty Limited (D1) Peter Lawrence Lewis (D2) Mark Lewis (D3) Nortex Pty Ltd (In Liq) (D4) JUDGMENT OF : Hamilton J

N A Cotman SC & J T Johnson (Kation P/L & P L Lewis) COUNSEL : S J Motbey (Lamru P/L) V R Gray (Liquidator & Nortex P/L) No appearance (M Lewis) Kemp Strang (P L Lewis & Kation P/L) SOLICITORS : Lyons & Lyons (Lamru P/L) Abbott Tout (Liquidator & Nortex P/L) Corrs Chambers Westgarth (M Lewis) CATCHWORDS : EVIDENCE [121] - Documentary evidence - Statutory provisions relating to business records - Source of knowledge asserted fact - Representations in contemplation of or in connection with proceedings. LEGISLATION CITED : Evidence Act 1995 ss 69, 136 Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 ASIC v Whitlam (2002) 42 ACSR 407 Creighton v Barnes NSWSC Cohen J unreported 18 September 1995 CASES CITED : R v Rondo [2001] NSWCCA 540 Schipp v Cameron (No 3) NSWSC Einstein J unreported 9 October 1997 Vitali v Stachnik [2001] NSWSC 303 Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd NSWSC Giles CJ Comm D unreported 8 September 1997 DECISION : Representations rejected as proof of facts asserted but admitted as evidence of a communication between solicitors.

8 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LIMITED (In Liq) 1750/02 LAMRU PTY LIMITED v KATION PTY LIMITED & ORS JUDGMENT 1 HIS HONOUR: The argument dealt with by this judgment arose from the tender of par 7 of the affidavit of R W Lamb sworn 29 October 2001. I had formerly indicated that I proposed to reject the words "as stated in the letter", but to admit the whole of that paragraph, save in so far as it proffered a letter of 7 February 2000 a copy of which was annexed to the affidavit and marked A. What is now being dealt with is the sentence in par 7 that proffers that letter and also pp 811 and 812 of Ex A, which are another copy of the same letter. Ex A has been tendered and received into evidence, but provisionally, on the basis that any party may object to particular documents in the bundle up to the close of evidence. In general terms those objections to documents in the bundle have not yet been dealt with. 2 Both par 7 and the letter deal with what occurred at a meeting on 21 January 2000. As already indicated, the letter was dated 7 February 2000. It was a letter from Lyons & Lyons, the solicitors for Lamru, to P A Somerset & Co, the then solicitors for the liquidator. The letter is tendered by Mr Motbey, of counsel for Lamru, on two bases: first, it is tendered as a communication between the solicitors for the parties; and it is frankly avowed that one purpose of this tender is that, without allowing any of the statements themselves contained in the letter any probative value, inferences may be able to be drawn from the non refutation by or on behalf of the liquidator of the propositions recorded in the letter. Secondly, in addition, Mr Motbey seeks to tender the representations contained in the penultimate paragraph of the letter under s 69 of the Evidence Act 1995 ("the EA") as probative of what was said at the meeting of 21 January 2000. In general terms, the letter is corroborative of Mr Lamb's version given in par 7 of what was said in certain regards at the meeting. 3 Section 69 of the EA is the current business records provision of the evidence law in this State. It provides relevantly as follows: " 69 Exception: business records

(1) This section applies to a document that: (a) either: (i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or (ii) at any time was or formed part of such a record, and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made: (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. (3) Subsection (2) does not apply if the representation: (a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or (b) was made in connection with an investigation relating or leading to a criminal proceeding."

I have had an opportunity overnight to read what cases I can find concerning the construction of s 69. These include: Creighton v Barnes NSWSC Cohen J unreported 18 September 1995; Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd NSWSC Giles CJ Comm D unreported 8 September 1997; Schipp v Cameron (No 3) NSWSC Einstein J unreported 9 October 1997; Vitali v Stachnik [2001] NSWSC 303 (Barrett J); R v Rondo [2001] NSWCCA 540; ASIC v Whitlam (2002) 42 ACSR 407 (Gzell J). 4 In my view, the following relevant propositions flow from the section considered in the light of that authority:

(1) It is important, as is general in exercises of statutory construction, to construe words in s 69 in the context of the section and of the EA generally. In doing this, it should be borne in mind that the EA supersedes not only the common law but the provisions as to admissibility of business records previously contained in Part IIC of the Evidence Act 1898. What must be concentrated on are the words of this section in the context of the EA. (2) It is important always to bear in mind that what may be tendered as evidence which evades the hearsay rule under the provisions of s 69 is not documents but representations in documents. In this regard, it is only in relation to the penultimate paragraph of the letter, to which I have referred, that tender is made by Mr Motbey under s 69. (3) The cases in general terms indicate that the inclusive provisions of subss (1) and (2) of s 69 should be regarded as being of wide import and construed accordingly: Schipp v Cameron (No 3) ; ASIC v Whitlam at [155], both supra. Equally, the exclusory provisions of s 69 ought be construed as sections of wide import. In particular, it should be borne in mind that the expression contained in s 69(3)(a), "in contemplation of" and the expression contained in both s 69(3)(a) and (b) "in connection with" should be regarded as words of wide meaning: R v Rondo supra at [96] per Smart AJ.

(4) It should also be noted that what is referred to in subss (3)(a) and (b) respectively is not the proceeding in which the tender of material is sought to be made, or a proceeding to which the investigation referred to in (b) has led, but simply a proceeding or an investigation.

(5) This links with what Barrett J has said to be the policy of the section in Vitali v Stachnik supra at [12]: "The purpose of the exclusion is, as I see it, to prevent the introduction through this exception to the hearsay rule of hearsay material which is prepared in an atmosphere or context which may cause it to be self-serving in the sense of possibly being prepared to assist the proof of something known or at least apprehended to be relevant to the outcome of identifiable legal proceedings."

(6) The point, as I apprehend it, is that the contemplation or existence of any proceedings may lead even persons of good intent to make purely self serving statements that may, without the exclusory provisions of subs (3), be admissible through the scheme of s 69. From this natural tendency to make self serving statements springs the policy that statements made in those circumstances ought be excluded from the ambit of s 69 which is, in general terms, generous towards the admission of statements contained in documents that meet the criteria of the section.

(7) It is not, as Mr Motbey has suggested to me, a requirement of subs (3) that a conclusion be reached that the creator of the document had the purpose of making self serving statements, whether true or false. It is, rather, that the possibility, bearing in mind human nature, to make self serving statements in such circumstances, leads the Act to exclude all statements made in such circumstances as a precaution against purely, and particularly false, self serving statements being taken into evidence.

(8) Whilst, as was said by Hope J in Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 548 - 549 (cited by Einstein J in Schipp v Cameron (No 3) supra), the business records provisions have the tendency to make the law of evidence approach reality, it is in the interests of reality that the old rule against self serving statements is preserved to the extent that I have indicated, even when such statements are made in business records. 5 Turning to the facts of this case, it is clear that the author of the letter, Mr Jim Lyons, was not present at the meeting on 21 January 2000. On the other hand, it is equally clear that his client, Mr Lamb, and indeed Mr Motbey, were present at that meeting, along with Mr Somerset, the liquidator, and members of the liquidator's staff. At one stage it was suggested to me by Mr Cotman, of Senior Counsel for the Lewis interests, that I could not draw the inference required by s 69(2) that the representation was made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted facts, or on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge. It was suggested that there was not sufficient evidence as to where Mr Lyons' information came from. However, it is clear that, whilst Mr Lyons was not at the meeting, both his client and his counsel were, and that Mr Lyons had an interest in the content of the meeting, if for no other reason than for the purpose of writing the letter under challenge. The inference is open in these circumstances that one of those persons who had personal knowledge of what was said at the meeting was the source of Mr Lyons' knowledge and I draw that inference. It is clear that the letter was part of the records of a solicitor's practice. It is clear that the representations referred to are within subs (2). 6 Various submissions were put by Mr Motbey as to why the document did not fall within subs (3). However, I have no doubt that it does. The letter indicated that a limited proceeding was already in existence, namely, the proceeding commenced by the notice of motion on appeal, one of the very proceedings that is now before me. Indeed, the notice of motion was served under cover of the letter. But the letter also indicated that there were proceedings of wider ambit under contemplation and that they continued to be under contemplation at the time the letter was written and, therefore, the representations tendered were made. That is probably sufficient to activate s 69(3). However, it is even clearer in my view that the representations were made in connection with an Australian proceeding, being the proceeding that had actually been commenced. They were not in contemplation of that proceeding, because that proceeding had already been commenced at the time of the making of the representations (ie, the writing of the letter), but they were in connection with that proceeding. 7 Mr Motbey has submitted that that is not so, because they concerned what was omitted from the existing proceeding and why. If he were right about that, then that would simply throw the situation back to being one where the letter was written in contemplation of proceedings, ie, proceedings which had not been brought but were in mind and at least remained possible. However, in my view the representations were in connection with the existing proceeding, being written for the purpose of explaining the ambit of the existing proceeding and the reason for exclusion from it of certain other potential proceedings. In essence, whilst it was hoped at that stage that those latter proceedings might not be brought, it was clear that there was a reservation of the right to bring them if necessary. 8 For those reasons I conclude that the representations were made both in connection with the proceeding that had been brought and in contemplation of other proceedings which were not at that stage brought but which still remained in contemplation to be brought if necessary. 9 In coming to these conclusions I have not forgotten what was said in Albrighton's case supra, where it was made plain that contemplation of proceedings did not extend to a situation where a transaction was entered into and it was not then anticipated that there would be proceedings, but there was always a chance that there might be in the future, as proceedings may arise out of any legally enforceable transaction. In my opinion that is also the correct view in relation to the contemplation of proceedings under the present Act. But, in so far as it is material, that was not the case here, where one proceeding had been brought and disputes had already broken out which could lead in due course to the commencement of other proceedings. 10 For those reasons, in my view the penultimate paragraph in annexure A and on p A812 may not be admitted under s 69 for the purpose of proving the truth of the allegations made, which are totally hearsay because Mr Lyons was repeating what he had been told had been said at the meeting. On the other hand, I do not accede to the submission, in so far as it was made, that, if a tender of representations is rejected under s 69(3), the document, or that portion of the document, cannot be tendered for any other purpose. It can be tendered for a non hearsay purpose. The non hearsay purpose for which it has here been tendered is to show the fact and the terms of a communication between solicitors. 11 I propose to admit the whole of the document, including the penultimate paragraph, but limited under s 136 of the EA to proof of the fact and content of the communication between the solicitors. On that basis, there should also be admitted the second sentence of par 7 of the affidavit of R W Lamb sworn 29 October 2001 commencing "On 7 February 2000 my solicitors sent Mr Somerset a letter ..." with the exception of the words "as stated in the letter" (which I have already indicated have been rejected). The balance of par 7 of that affidavit is admitted.

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Judgment (14 paragraphs)

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Cases Cited (2)