Lewis v Nortex Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LTD (In Liq) 1750/02 LAMRU PTY LTD v KATION PTY LTD & ORS JUDGMENT 1 HIS HONOUR: The nomenclature I shall adopt in this judgment is: the plaintiff - Lamru Pty Ltd; the first and second defendants - Kation Pty Ltd and Peter Lewis; the third defendant - Mark Lewis; and the liquidator - the liquidator of Nortex Pty Ltd (In Liq). There are a number of applications before me today. One is an application that has been before me on previous occasions. It is an application on behalf of the plaintiff for a direction or order that the liquidator call a witness at the trial of these proceedings. The witness concerned is a Mr Potter, who is an employee of the liquidator. The application is made under Division 1 of Part 4.6 of the Evidence Act 1995 ("the EA"). 2 The factual material on which the application is made is that Mr Lamb, a director of the plaintiff, deposes in an affidavit proposed to be used at the hearing, as follows: "I was informed by Mr Michael Potter an accountant in the employ of the liquidator's firm, in or around November [1999], that when he asked Mr Lewis to give his views to him on Lamru's claim in respect of the missing stock that Mr Lewis said words to the effect 'Lamb took the stock'."

Mr Lamb goes on to say that Mr Potter confirmed this statement in his presence on other occasions. It seems, however, that Mr Potter's recollection of these events is less than and different from Mr Lamb's recollection. The degree of his recollection as at November 2001 is set out in a letter from Abbott Tout, the liquidator's solicitors, to Lyons & Lyons, the plaintiff's solicitors, dated 23 November 2001. The defendants and the liquidator have no intention of calling Mr Potter as a witness in the proceedings, as I am informed. 3 The provisions of Division 1 Part 4.6 of the EA, so far as relevant, are as follows. In s 166 "request" is defined as including a request by one party to another - in relation to evidence of a previous representation - to call as a witness the person who made the previous representation. Section 167 provides that a party may make a reasonable request to another party for the purpose of determining a question that relates to a previous representation or the authenticity, identity or admissibility of a document or thing. Section 168 prescribes time limits for making requests where one party has given notice of its intention to adduce evidence of a previous representation. Section 169 provides that if there has been without reasonable cause failure or refusal to comply with a request the Court may make various orders, including an order to call as a witness a specified person. 4 In my view, the provisions of Division 1 are simply not applicable in the circumstances in which they are sought to be used in these proceedings. The provisions contemplate that one party proposes to lead a piece of evidence in circumstances where another party may be disadvantaged by the use of mechanisms for the admissibility of evidence under the EA without witnesses who may speak to the authenticity of the piece of evidence being called. That arises particularly in regard to the leading of hearsay evidence, whether through the medium of the tender of a business record containing relevant statements under s 69 of the EA or by the tender of evidence of other hearsay representations under other exceptions to the hearsay rule. My conclusion that it is this situation that Division 1 is aimed to deal with is reinforced or confirmed by a number of factors. 5 First, it seems to arise from the general tenor and pattern of the sections within the Division itself. 6 Secondly, that the intention of the Division is as I have outlined appears from its naissance in the Australian Law Reform Commission Reports which led to the enactment of the EA. In particular, it is stated in ALRC 26, Vol 1, par 707 as follows: "The present Commonwealth Evidence Act 1905 does not provide a general mechanism by which the party against whom the business record is led may question the persons who supplied the information kept in the record or made the entries in the record ... the party relying on the record will at times need to call those responsible for the entries and runs the risk of little weight being given to the record if they are not called. Some protection for the other party, however, is needed in both civil and criminal trials. It is proposed that the court have the power to direct the calling of persons involved in making the record."

During the formulation of the Act in its final form, the provision was expanded, so that it now applies to previous representations generally, rather than only to documents tendered as business records. I ought say, looking at the definitions of "previous representation" and "representation" in the Dictionary to the EA and comparing those definitions with the provisions of s 59(1) of the EA, it seems to me that "previous representation" as used in Division 1 of Part 4.6 may well be wider than the "representations" comprehended in s 59. There the ban is on previous representations where their use is to prove the truth of what is represented. The purpose of the tender in this case may well be to prove the making of a representation in the terms alleged, rather than the proof of the truth of the content of the representation; nonetheless, it seems to me that "previous representation" is used in a wide sense in Division 1 and is not limited to previous representations tendered as proof of their contents. That may be relevant to the representation at present under consideration, but does not lead to the applicability of the provisions, because it does not detract from the proposition that it is only where one party proffers the representation in evidence against another that the latter may ask for an order under s 169. A party cannot himself or itself proffer the representation, then ask some other party to call the maker of it. 7 A third matter that confirms my conclusion that that is the pattern of this part of the Act comes from the fact that that is the way in which the provisions have in fact been used in practice: see, for instance, the decisions of McLelland CJ in Eq in Telstra Corp v Australis Media Holdings NSWSC 18 March 1997 unreported and Hodgson CJ in Eq in Official Trustee in Bankruptcy v D'Jamirze [1999] NSWSC 986. The same was so in an earlier case decided by me, Commissioner of Taxation v Karageorge (1996) 22 ACSR 199, although there I denied operation to Division 1 by reason of the fact that the document had in that case been tendered under s 1274 of the Corporations Law and not under the provisions of the EA. 8 My conclusion is also reinforced by the fact that the EA provides another avenue for dealing with the situation which the plaintiff faces in this case. It will not be left in a situation where it is impossible for it to cross examine the relevant witness or investigate the state of his recollection. The EA in s 38 contains a wider provision than was available under the common law for dealing with witnesses who give unfavourable evidence. That section provides that a party who called a witness may, with the leave of the Court, question a witness as though the party were cross examining the witness about evidence given by the witness that is unfavourable to the party or where the witness has at any time made a prior inconsistent statement. This legislative provision replaces the pre-existing common law as to hostile or adverse witnesses. The full ambit of the concept of unfavourable evidence under s 38 has not yet been explored, but it is plain that the concept is wider than the notion of adverse or hostile evidence at common law: see the decisions of the Full Court of the Federal Court in Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 at 429 - 30 and the decision of the Court of Criminal Appeal in R v Kneebone (1999) 47 NSWLR 450 at 461 - 2. Whilst I do not bind any future exercise of my discretion, it seems to me highly likely that the plaintiff, if it chose itself to call Mr Potter, would be able either from the outset of his evidence or shortly thereafter to examine him as if cross examining him, at least if he denied making or failed to concede the statement deposed to by Mr Lamb in his affidavit. 9 Be that as it may, it is my view that the application is simply not within the structure provided by Division 1 of Part 4.6 of the EA and the application by the plaintiff that the liquidator be ordered to call Mr Potter as a witness is refused. The plaintiff's application was made on a formal notice of motion filed 31 January 2002. I order that the plaintiff pay the liquidator's costs of that notice of motion.

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